Hello. This is Michael Yun, Head of IR team. Welcome everyone to Hyundai Motor Company's 2024 Q3 Business Results Conference Call. On behalf of Hyundai Motor Company, I appreciate your time for participating in today's call. Please refer to the presentation HMC 2024 Q3 Business Results on our IR website. Today's presentation consists of two parts, sales summary and financial summary. For more information, please refer to the appendix page. First part is sales summary. Our 2024 Q3 global wholesale decreased by 3.2% year-on-year to 1,011,800 units, while retail sales decreased by 3.1% year-on-year to 988,594 units. In the third quarter, our global wholesale decreased slightly compared to the previous year. However, excluding China, our Q3 wholesale was comparable to previous year. In the domestic market, sales increased by 1.8% compared to the previous year, driven by the EV sales improvement as the launch of Casper EV and increase in hybrid demand. On the next slide, we have a 9.3% increase in sales, driven by continued strong sales of high-margin vehicles. The US market witnessed increased sales of hybrids and SUVs with growth rates of 71.3% and 4.7% respectively, compared to the previous year, boosted by increase in demand of overall hybrids models, including Tucson, Santa Fe, Aventi and Sonata. In Europe, although hybrid sales increased by 20.9% compared to last year, driven by strong sales of Santa Fe, KON and Tucson Facelift hybrids, sales decreased by 9.5% compared to the previous year on a wholesale basis due to weaker demand for EVs. In India, sales decreased by 5.7% compared to the previous year on a wholesale basis, driven by slowdown due to seasonality and pent-up demand before festival season in Q4. Next is sales by model and key status. Global SUV sales accounted for 60%, a 1.4 percentage point increase compared to the previous year, influenced by the global expansion of Santa Fe and the sales ramp-up of CRETA Facelift in emerging markets as well as strong sales of GV70. This segment, the highest margin segment was 7.3%, a 1.3 percentage point increase driven by sales expansion of Sonata hybrid. For eco-friendly vehicle sales, although EV sales decreased by 8.1% due to weakened demand, EV slowdown has recovered from the first half of the year due to the launch of Casper EV. Hybrid sales increased by 45.4% compared to the previous year, replacing weakened EV demand. Hybrid sales are substantially increasing globally, including but not limited to Korea, US and Europe. This is the end of the presentation on sales summary. And now I'll move on to financial comments. This is the income statement. In the Q3 of 2024, revenue increased by 4.7% year-on-year to KRW43 trillion, while operating profit decreased by 6.5% year-on-year to KRW3.6 trillion. In the Automotive division, revenue increased by 5.3% year-on-year due to regional mix improvements centered in North America and product mix improvements centered on high-margin vehicles as well as increase in volume. Meanwhile, operating profit, including consolidation adjustments, decreased by 7.7% year on year due to an increase in incentives, driven by intensified global competition and an increase in SG&A. In Finance division, revenue increased by 10.1% year on year due to expansion of AUM, resulting from increased penetration rate under strong US Sales. Despite an increase in interest costs and provisioning costs associated with asset growth, the operating profit increased by 13.6% year-on-year driven by increased return on assets due to the OEMs mix improvement. Net profit decreased by 3% year-on-year to KRW3.2 trillion due to a decrease in operating profit. Next is revenue and operating income analysis. In terms of revenue, there was a negative volume effect of minus KRW221 billion caused by a decrease in sales. Despite an increase in incentives, there was a mix effect of KRW1.5 trillion due to the strong North America sales and ASP increase. Also, there was positive FX effect of KRW494 billion under favorable exchange rate environment and an increase in financial division revenue resulted in a 4.7% increase in total revenue compared to the previous year. As for operating profit, there was a positive FX effect of KRW787 billion due to favorable exchange rate environment. However, a negative mix effect of KRW469 million driven by an increase in incentives as well as onetime warranty cost of KRW319 billion due to a proactive warranty extension for Grand Santa Fe sold in the US resulted in a 6.5% decrease in operating profit. Our Q3 cost of goods sold ratio recorded a 0.8 percentage point increase year on year to 80.2%. SG&A increased by 6.1% year-on-year to KRW4.9 trillion due to increase of label cost. Lastly, net profit decreased by 3% year-on-year to KRW3.2 trillion affected by a decrease in operating income. That concludes the presentation of the Q3 2024 business results. Thank you for listening. Next, Senior Vice President, Seung Jo Lee, the Head of Planning and Finance Division, will address the company's business results for Q3 2024 annual performance outlook and the dividend payout for Q3.

Hello. This is Senior Vice President, Seung Jo Lee, Head of the Planning and Finance Division. Allow me to share our business results for the Q3 of 2024 as well as the outlook for the business ahead and quarterly dividends. In Q3, driven by strong HAP and Genesis sales, continuous mix improvement, favorable FX effect and material cost reduction, we have reached the operating profit in line with the market consensus. However, our preemptive guarantee extension measures regarding Lambda II engine of the Grand Santa Fe model sold in North America resulted in around KRW320 billion of provisions for liability, recording on operating profit of KRW3.6 trillion and an operating profit ratio of 8.3%. This warranty extension is caused by the high usage of towing by US consumers, and we have proactively implemented the warranty extension for the total number of sales. In the case of other models with the same Lambda II engine, this issue has not occurred. If not for the above one-time contribution amount, an operating profit of KRW3.9 trillion and an operating margin of 9.1% would have been possible. Next, I will talk about the 2024 annual performance outlook and business environment. We expect to achieve the 2024 annual guidance of 4% to 5% of sales growth and 8% to 9% of operating margin, and we have maintained the performance guidance that was mentioned earlier this year. However, due to worsening business environment in the automotive market such as increased geopolitical risks, high uncertainty in government policies and regulations such as fuel efficiency regulations, and concerns over slowing demand in advanced markets, incentives are expected to negatively affect our profitability in the short-term. Regarding the risk of deteriorating business environment, we are closely analyzing the market landscape through regular monitoring. Based on our enhanced fundamentals over the past few years, we will strengthen our profitability-oriented management status by improving sales mix, and continuously reducing costs. And we will continue to secure a strong profitability through flexible market responses, which are our strength. While maintaining our fundamentals by improving the sales mix centered on high-margin models and cost reduction, we will respond flexibly to changes in the market environment. Next, I will talk about the dividend for Q3. As in the first and second quarters, we will implement a quarterly dividend of KRW2,000 trillion which was raised by KRW501 trillion from the previous quarter. Including the value program announced at the CEO Investor Day, we'll make sure to implement the shareholder return policy as promised to our shareholders and investors. Lastly, regarding the India IPO, let me share the shareholder return policy. Basically, the Indian competitiveness, the proceeds from this India IPO will be returned to shareholders. And we will establish the relevant IPO proceed plan, and get the approval from the BoD and then share you the details later. Thank you all for your support and thank you for listening.

Next, Senior Vice President, Gyusuk Lee, the Head of Planning and Finance Division of Hyundai Capital, will share the Q3 results and Q4 outlook for the finance business.

As a result, in August S&P raised our credit rating along with HMC from BBB plus to A-. This year, all three global credit rating agencies raised our rating to A, the highest achieved for nonbank financial firm in Korea. Consequently, our funding competitiveness has been further strengthened. I'd like to share the details for each company. First is Hyundai Capital. Led by our strong funding power, we strengthened the sales support for HMG and were able to further expand our financial assets for auto financing. The proportion of auto financing accounted for 83% of the operating profits, maintaining a high ratio. Expansion of financial assets in the auto financing business increased installment and lease profits, resulting in YTD operating income to increase by 11% year on year in Q3 when excluding FX and derivative losses. In terms of cost, interest expenses have risen due to continued high interest rate, but the cost of bad debt remained stable, increasing the operating profit by 17% year on year. Overseas, profit improved in various overseas entities such as France, Canada and Brazil to achieve a year-on-year equity method income increase of 55%. And as a result, net income increased by 21% year-on-year. Some capital firms are showing performance due to continued high interest rates and real estate risks resulting in deteriorated profitability and soundness, but Hyundai Capital expanded its profit and secured soundness by operating a strong auto financing portfolio. The delinquency rate has further dropped to record an all-time low of 0.86%. With optimized portfolio operations and stable funding, Hyundai Capital will strengthen the sales support for HMG domestically and globally and respond to market volatility. Next is Hyundai Capital America, HCA. In the US, sale mix improvement was driven by SUVs and hybrid models, resulting in YTD penetration rates increased by 8 percentage points year-on-year in September, raising the sale volume by 14% year-on-year. Total financial assets increased by 22% year on year. Due to continued asset expansion, YTD installment and lease income in September, up by 50% and 13% year-on-year, respectively. Total operating profit increased by 23% year-on-year. Increase in sales raised interest and bad debt expenses, lifting the operating expenses by 23% year on year. However, YTD operating profit in September improved by 32% year on year. In Q4, drop in interest rates and presidential election results are expected to further increase the uncertainties in the market. However, HCA is maintaining a significantly low delinquency rate even compared to pre-COVID-19 times and increasing its prime customers' rate to 88%, minimizing risks. In terms of funding, HCA pre-secured the liquidity by issuing global bonds worth $10.7 billion in addition to the $8 billion secured in the first half. HCA will continue to support HMG sales in the US By expanding EV sales and providing financial support for new-build mobility businesses. This is the end of my presentation on the finance business. Thank you for your attention. With that we’ll conclude the presentation and take your questions.

[Foreign Language]. The first question will be presented by Eun Young Yim from Samsung Securities.

Thank you for the opportunity to ask the question. I’m Eun Young Yim from Samsung Securities. So, my first question is regarding the provisioning that you mentioned that you said it was a one-time provision. However, it seems that the overall warranty fee is lower than the year-on-year cost at KRW566 billion. And when we talk about warranty, we tend to look up is there any articles regarding recalls or so. But I don't think there have been any articles or news regarding a recall. But you said that it was a proactive action that we have taken. So, what is the background to such actions because the warranty fee is considerably low considering the provisioning. So, what is the reason behind that? That's my first question. My second question is, Hyundai is now actively engaged with partnering with GM, for example or with Waymo in terms of foundry business. But I understand that your R&D function is currently shared between Hyundai and Kia and you also share the cost. So, if there is any cooperation with these partners regarding platform, shared platform or powertrain or hybrid technology, who is holding the patent and who is sharing the cost? Is it solely by Hyundai or would this be shared with Kia as well? [Foreign Language] Thank you for your question. So, to answer your first question regarding the provisioning, so that was regarding region 2, and it wasn't actually a recall regarding safety. The engine that is mounted on this vehicle, Grand San Jose, was sold in North American market. In Korea, that would be Max Cruise model, and it's the 2013 and 2014 model year version. Now we have contributed 320 billion worth in terms of provisioning to extend the warranty. And the used consumers tend to use a lot of the towing function and when that function is used, it's really used at a high output, which means that it's done at a very high RPM level. And also compared to what the manufacturers are commanding in terms of the changing period for engine oil, the US consumers tend to use it a bit longer, making the oil kind of wear out and kind of putting too much pressure on the engine as well. And as a result, however, this didn't really directly result in the default rate increasing. Whatever the case, we were not able to fully reflect the local users' characteristics in our developing process. So, we contacted NHTSA of the US and decided to do a preemptive action in terms of extending the warranty. So, it's not necessarily a recall, it's where we have extended the warranty from 10 years 100,000 miles to 15 years to 150,000 miles. [Foreign Language] And the provision cost was reflected fully for all 2013 and 2014 model year models. So, I don't think there will be additional provisioning contributions in the coming years. Whatever the case for us, top priority is the consumers as well as the quality. And we have zero tolerance in terms of anything that will damage the quality and also the customer value. So, Hyundai Motor will continue to proactively and actively act on our principles.

[Foreign Language] Now to answer your second question, I will have to check the specific details into this. But let me just give you an answer at first time, and if this is wrong, we will correct you later. Like you said, the R&D Center is currently 1300 and Kia where the investments as well as the advanced technologies are developed together. So, anything that is used in that field, the patent that is held jointly will be separated and the two companies actually develop their own models and cars. So, any of the technologies that were developed in that phase would be also handled differently. Now if there is any technology patent that is used or collaborated with GM and Waymo and that is related to Kia, we'll make sure that is separated. Whatever the case, we will work in a way so that all of the collaboration is to do with Hyundai only and not really an interference with Kia, and that any of the profit made through this will also solely be held by Hyundai as well. [Foreign Language] If I could further elaborate please regarding the provisioning, the reason that it's lower than the previous year is because due to the year-end FX rate.

[Foreign Language] The next question will be presented by Kyung Jae Hwang from Merrill Lynch Securities.

[Foreign Language] I have four questions. My first question is regarding the OP increase and decrease. So, if you go back to the OP profit and financial income statement, you said the other cost account for about KRW569 billion and even excluding the KRW320 billion which accounts fall under recall, there are still remaining KRW204 billion for other expenses. So, I wonder where these other expenses were used? And my second question is regarding the Meta plant operation in the US that will be held in October this year. I wonder that if the Meta plant is still in started operation and if not, when it will start operation? And also, regarding the IONIQ 5 that will start as of soon, I heard that the major that the middle train IONIQ 5 model will be set around $50,000 to $55,000. So, I wonder whether the price range will go down from this set price or it will be remained? And my third question is in connection with the previous question. You talked about the year-end exchange rate and related provisions. And when considering today's FX rate, the level is that of the second quarter. But if you see that these FX rate remains until the end of this year, I want to ask whether the provision will dramatically go up or down or how the trend will continue? And my last question is about the India IPO process. You said that the details will be shared later on. But I want to know the exact time line whether the share return policy will be executed within this year or whether the dividends or the treasury stock payment will be made next year? If so, when will be the exact timeline?

[Foreign Language] The CBA cost which was signed in July this year. So, from July to September this year, there was additional expenses or other expenses that were KRW400 billion. And for your second question about the Metaplant operation in the US, it actually started in October 3rd this year and now we are in the ramp-up phase. So, the volume is quite low, but we are trying to make things speed up and once it's normalized, I think the volume will go up as well. And regarding the price range of the IONIQ 5, we are considering various factors including raw material cost and battery cost and the price hasn't been finalized yet. But we are trying to make it as competitive as possible. So, for that we are looking things from the multi-sided angle and if the Metaplant starts operation, we'll be able to receive incentive for that from next year, and that will further make increase efficiency of our sales cost as well. So, we will try to maximize our customer value in this respect. For your third question, the Q4 FX rate, $1 rate stayed at around 1,381 per dollar and I believe your concern is about the FX impact FX rate impact on the provisions. And the logic is that once the FX rate goes up, then we'll get more profit from the selling of the foreign currencies. So according to that logic, I believe that you will see more profits in the upcoming Q4. Regarding your last question about Indian IPO, although it is difficult to specify the exact timing, we will try hard to communicate with the market within this year. And I actually just came from the NDA business trip yesterday, so I will try my best to communicate with the relevant parties, including the Board of Directors and get to you as soon as possible. [Foreign Language]

The next question will be presented by Yongkwan Moon from Shinyoung Securities. Thank you for giving me the opportunity.

[Foreign Language] I have two questions. 1st, regarding the Lambda engine again. You said that this was mounted on the Grand San Jose. However, do you think there will be a possibility for this issue to be spread out to other models, such as the Kia model? Because I understand that there was an issue with the same engine in 2017 with Genesis, so there was a recall regarding the luxury vehicles as well. So, will this KRW320 billion of provisioning just covering the entire engine that are mounted on all models? Or will it just be for Grand Santa Fe? My second question is regarding the downsizing of the guidance because many of the European OEMs are also lowering and readjusting their guidance level, and they are not able to portray an OP level of maybe two digits, but maybe 7% to 8% -ish. And you also said that this is due to the unfavorable environment that is expected in the upcoming years. So, although you might not be able to give you a specific number, what is your forecast for the automotive business OP? Will it be the same level as the first half of this year? Or what is your rough outlook?

[Foreign Language] Thank you for your question. Let me answer your first question regarding the Lambda engine. I'd like to apologize that I'm not able to comment on what the other companies or listed companies or actions that are going to take. However, I'd like to emphasize once again that the Lambda engine, it's not really actually due to the engine itself, but because of the characteristics and the use environment of the consumers of the SUV that is mounted with this engine, in particular Maxcruz and other SUV models. So, although this problem is somewhat connected to the engine, but it's really more to do with the user characteristics of the SUV drivers that has this engine mounted on and that led to the increase in the provisioning. However, apart from that, I apologize again that I will not be able to give comments on what other companies will do in the upcoming future regarding this. [Foreign Language] And I would like to reiterate again that regarding to revisioning contributions, we did go through a lot of discussion as well as multifaceted review. And we did not -- we really did not want to repeat the same problems that we had in the past. So, this contribution level was calculated at a very conservative level. Moving on to your second question, the Q4 business environment is actually not as favorable. We also have increase in incentives, so we will have to pull our all our efforts in the sales, not only retail, but also wholesales as well, so that we can make up for any of the losses that could occur for Q4. Now our annual guidance, we had mentioned that the OP level will be at 8% to 9%, and we will be able to keep that level. As for next year, as we mentioned in the CU Investor Day previously, it will not be easy. However, we do intend to maintain our mid- to long term profit level at 8% to 9%. Whatever the case, we'll keep a close eye on our upcoming future so that we can respond accordingly. Thank you. Due to the time constraint, we will be receiving one last question. Thank you.

[Foreign Language] The next question will be presented by Kung Jae-il Jung from Merrill Lynch Securities.

[Foreign Language] My first question is about hybrid mix and powertrain profitability. Before that, I'd like to mention that even considering the onetime expenses of KRW319 billion there was an operating profit worth KRW3.9 trillion, when the operating margin was 9.2%. So even despite the challenging external environment like you mentioned, I believe that you have achieved very stable and strong operating margin. So in regards to that, I'd like to know about the profitability of hybrid powertrain until the first half of this year versus the ICE engine vehicles. And my second question is regarding material cost trends. So, I'd like to know what the trends were like until the end of this year and what is the outlook for next year?

[Foreign Language] Answer to your first question is about the hybrid sales. In the third quarter, we sold 131,000 units. That accounts for 13% of the total sales. It is 4.5% up year-on-year and even compared with the last quarter, 1.3% up. And we will maintain this strong sales momentum in the fourth quarter as well. Regarding hybrid profitability, I'm sorry, I cannot tell you the exact number, but when considering the FX impact, we are overachieving the business level. And even when compared with the ICE vehicles, I would say that some hybrid models are very profitable. It's the second digit number and profitability is even higher than the overall operating profit. So, I say that our strong, we have very strong sales in terms of high-price portfolio. [Foreign Language] We have the continuous efforts to reduce our raw material cost and we have the medium to long term plan for reducing material cost for PE parts and EV parts as well. So, I would like to tell you that we're making gradual and continuous improvements in this part. However, there may be some increase in the material cost due to high processing caused by increase in wage. However, we will make sure to offset that as well. And we're keeping a close eye on the raw material cost, which is continuously -- which has been continuously declining this year. There is a possibility of increasing next year as well, but we will secure much more volume in order to proactively respond to this increasing raw material cost. So, we will try our best to minimize its side effect. Thank you. [Foreign Language] To add one more comment, from January to September this year, we have been making innovative efforts to reduce material cost. And thanks to these efforts, we were able to reduce KRW400 billion. And with that, we will also combine our accumulated know how in terms of innovative raw material reduction. So, we will maintain this trend to the next year as well. And when setting the business plan next year, we'll make sure to reflect this our efforts and we will cooperate with relevant departments to maintain this momentum as well. Thank you.

[Foreign Language] We would now like to end the earnings call for Q3, 2024. Thank you for your time.