Welcome to the Global Conference Call of Daimler. At our customer's request, this conference will be recorded. A replay of the conference call will also be available as an on-demand audio webcast in the investor relations section of the Daimler website. [Operator Instructions] I would like to remind you that this teleconference is governed by the Safe Harbor wordings that you find in our published results documents. Please note that our presentation contains forward-looking statements that reflect management's current views with respect to future events. Such statements are subject to many risks and uncertainties. If the assumptions underlying any of these statements prove incorrect then actual results may be materially different from those expressed or implied by such statements. Forward-looking statements speak only to the date on which they are made. May I now hand you over to Steffen Hoffmann, Head of Daimler Investor Relations. Thank you very much.

Good morning, ladies 0and gentlemen. This is Steffen Hoffmann speaking. On behalf of Daimler, I'd like to welcome you on both the telephone and the Internet to our Q3 results conference call. We're very happy to have with us today, Harald Wilhelm, member of the Board of Management of Daimler responsible for Finance & Controlling and Daimler Mobility. In order to give you maximum time for your questions Harald will begin with an introduction directly followed by a Q&A session. The respective presentation can be found on the Daimler IR website. Now, I'd like to hand over to Harald.

Thanks, Steffen. And good morning, welcome to everybody on the call here. Thanks for joining us. Well, on the 6th of October, I think we had a pretty intense Mercedes-Benz strategy update, so therefore, I suggest that today, we focus on the Q3 performance and that we will give an update on the outlook for the fourth quarter and the full year 2020. Therefore, please understand that, we will not focus on the longer-term perspectives nor on 2021 today. As we already informed you last week, the third quarter shows a very strong performance and provides further proof that we are on the right path to reduce the break-even point of our company. And the same time, we continue to seize opportunities from improving markets with our great products at Mercedes-Benz Cars, Daimler vans – Daimler Trucks & Buses, and Mercedes-Benz Vans. This gives us confidence to push ahead with our work, both on the strategic and the operational side of the business. The strategy laid out on the 6th of October, the operational focus, the Q3 achievements I mean allow us to look with some confidence ahead into the fourth quarter, and therefore to give you that quantitive guidance here for the full year 2020. First, let me turn a bit to the highlights of the third quarter however on page number 2. Well, I already mentioned, I mean, our Mercedes-Benz strategy update three weeks ago. I think you could take away very clearly that we will focus our strategy on profitable growth in the luxury segment and that we also target the leadership in electric drive and car software. At the same time, we are very focused to work diligently to improve our break-even point. Furthermore in mid-August, we informed you that we have reached another milestone towards the resolution of various diesel proceedings. The U.S. regulatory authorities have approved the settlement of civil and environmental claims in the United States. We will not be subject to external monitorship as we have successfully launched our internal technical compliance system that will serve as a blueprint for the wider auto industry. We are glad that, we are making progress in resolving these legacy issues. Then on the quarter three, we have seen a faster-than-expected market recovery and particularly strong September performance. This combined with our diligent cost discipline, extensive cash preservation measures, and further efficiency enhancement have had a significant impact this quarter. We were able to generate a free cash flow of €5 billion. This is reflected in the net liquidity which amounted to €13 billion at the end of the quarter, but also on the sustainability side, we have been doing some progress. It's clearly in our focus. And you can see that also in the green financing, where we issued the first green bond with a €1 billion ticket in September. So CO2-neutral mobility and production is a clear goal and an integral part of our sustainable business strategy. If we now turn to page 3 on the key numbers. Despite the ongoing COVID-19 pandemic, unit sales and group revenues were only slightly lower than the prior year figure with minus 8% and minus 7% respectively, whereas in Q2 unit sales were down 34% and revenues were down 29%. Despite these lower revenues, adjusted EBIT was up 11% on prior year quarters at €3.5 billion, reflecting the impact of our group-wide cost measures. Earnings adjustment came mainly from the restructuring measures in Mercedes-Benz Cars & Vans segment. The unusually strong industrial free cash flow of €5.1 billion reflected in particular extensive cost and cash preservation measures, strong operating performance across all divisions, leading to very favorable cash conversion rate. In addition, the quarter saw the expected receipt of a €1.2 billion dividend from our joint venture in China, BBAC and some seasonal phasing impacts. Let's have a look more in-depth on the net industrial liquidity evolution on Page 4. We start with a Q2 net cash of €9.5 billion. We achieved a healthy level of net cash during the three months ending with €13 billion. So if you go from the left to the right: Earnings and other cash flow impacts amounted to €4.3 billion, driven by a strong net profit from industrial operations. Furthermore, the €1.2 billion dividend, as I mentioned already before helped here. The positive working capital impact came from Mercedes-Benz cars and vans in the amount of €435 million and from trucks and buses of another €184 million, both mainly due to favorable development of payables and additional positive inventory development at trucks. In the next column you can see as well that our effort to limit investment was successful in quarter three with investments now being lower than depreciation and amortization. The net industrial liquidity reflects as well €1 billion of the dividend we paid in July to our shareholders after the AGM and some FX effect that is covered in the other column. Besides cash flow management, we further strengthened our financial flexibility with good access to capital market; our revolving credit facilities, three issues, which we – the three bonds which we issued this year; and a high level of gross and net industrial liquidity to protect our financial flexibility. And I think it's pretty obvious from this that we therefore see no need for equity raise. We now move to Mercedes-Benz cars and vans on Page 5. We can see a worldwide recovery of the passenger car sales which continued in the quarter. We had a favorable model mix, improved pricing and a significant reduction of fixed costs. And accelerating headcount reduction and all of that I mean, obviously helped the profitability. On the sales side, we see an increasing demand of low- and zero-CO2-emitting cars. Especially in Europe, we received rising orders and particularly for the plug-in hybrids. And Mercedes-Benz cars, we delivered more than 45,000 xEVs to our customers from July to September. Current and for quarter four expected xEV sales bring us in striking distance to achieve our CO2 emission target this year. With Factory 56 at the beginning of September, we opened our first fully CO2-neutral production site. At the same event, we revealed our all-new S-Class. We are glad that we can utilize this new sustainable production facility for series production of our Mercedes-Benz flagship; and for the EQS, which will come to the market in 2021. The new S-Class stands for a new luxury experience from all aspects: comfort, safety, user interaction and connectivity through next generation of our MBUX system. And of course, the new S-Class will help us on our path towards higher profitability. And I hope you will all have soon the possibility to enjoy a ride in it. Besides focusing on the Mercedes-Benz cars segment, it is also great to see how well the van business has developed lately. At vans, we go through a massive operational turnaround. The profitability at vans in the third quarter was very much in line with the profitability of the Mercedes-Benz cars business. Furthermore, with the EQV, we start – we are setting new standards for electric mobility also in S-Class. Since September, the first purely battery electric EQV has been driven off the production line. Let's have a look a bit closer into the sales development in the third quarter, Page 6. Demand from our customers was significantly higher than we had expected earlier. Despite the COVID-19 pandemic, deliveries from July through September benefited from a recovery in many markets. This increased demand was met even at short notice in particular by reducing dealer inventories. In Europe, where Q3 unit sales were 5% lower compared to last year's figure, year-to-date we are at minus 22%. In China, Mercedes-Benz cars largest market, passenger car sales increased by 24%, setting a new record for the third quarter. Year-to-date, unit sales are up 7%. In the United States, Q3 units sales are minus 31%, year-to-date minus 24%. In general, the third quarter also shows how regionally diverse the situation still was in the market. We will therefore monitor developments very closely in the fourth quarter and continue the prudent approach in terms of supply of markets that we follow through this year. However from today's perspective demand for Q4 is encouraging, higher than Q3 but slightly lower than Q4 2019. One further comment I'd like to make here is as mentioned on the chart you see group sales. It is important to note that again for all three months in the quarter retail sales were above group sales indicating that we enjoy a healthy market pool. What goes hand-in-hand with markets pulling and diligently balancing the supply side are favorable stock levels for new cars, residual value stabilizing, used car stocks being on the low levels. Considering the low levels that we have reached at the moment we probably need to refill, I mean, the pipeline slightly in Q4, but carefully. Now key figures on page 7 for cars and vans. Unit sales, I mentioned already were 4% lower in that segment compared to prior quarter amounting it all-in-all to 673 vehicles. You might remember in Q2 we were down minus 30%. So we had a strong run on SUV sales in particular the GLA, the GLB and the GLS, which increased by 23% and reached a new record for the third quarter. At vans, the unit sales increased by 7% to 107,000 units in the quarter, particularly, due to positive developments in China and Europe. Supported by strong pricing, revenues in the cars and van segment were down 3% at €26 billion compared to minus 4% on the unit sales side. The division adjusted EBIT is €2.4 billion, which we'll explain a bit more in a second 29% up versus last year's quarter. And the CFBIT amounted to €4.6 billion, a significant step-up. Looking at page 8 or the EBIT walk. The EBIT adjusted increased to €2.4 billion with an return on sales adjusted of 9.4% sitting above the 7% of the previous year quarter. Model mix and pricing of the vehicles continued to develop well, however, not compensating the lower volume and negative volume structure impact from xEVs, which you can see in the minus €337 million here. A smaller negative impact on earnings came from unfavorable development of foreign exchange currencies. We had a significant positive impact on EBIT on the costs side. The industrial performance was slightly positive. What does it mean? Production efficiencies and if you see I mean slight positive. That also means that we could more or less mitigate production-related fixed cost redundancies. Also like -- unlike in the second quarter there was no short-term labor benefit anymore. Furthermore, a significant reduction in all fixed-cost areas boosted earnings. G&A, R&D and in particular selling expenses were lower than in the same period of last year. In addition, an adjustment to a retirement and health care plan in the U.S. also helped a positive impact on selling expenses. This was in the magnitude of a low triple-digit-million figure. Furthermore, EBIT was adjusted by expenses for the initiated personnel cost reduction program and restructuring expenses for the adjustment and the realignment of capacities. So in the €297 million restructuring measures, the intended sale of the Hambach plant is included also with additional €68 million. On the cash flow side, we achieved CFBIT adjusted of €4.8 billion. Obviously that includes the enhanced profitability, the working capital change and the BBAC dividend. If we go again a bit from the left to the right, we see €435 million from a change in working capital driven by trade payables. Inventories were slightly restocked in quarter three in order to prepare for the increasing demand and fill lower dealer stocks as I already mentioned before. In terms of CapEx and R&D, we have presented to you a plan on 6th of October with concrete commitments how we will lower spending on a year-over-year basis. As you know last year we have introduced an investment cap. With COVID-19 unveiling, we initiated further CapEx saving measures and actually cut back on non-pressing topics. At the same time, we made sure that the key products like the S-class, the C-class or the EQS are not compromised. And we continue to invest in the technologies of the future including electrification and software. So consequently, we have said that going forwards the relative CapEx reduction will be even stronger than the reduction in R&D. The Q3 figures that you see here confirm these efforts. Net investments went down and were below the D&A level. In the column labeled others, I want to highlight, I mean, three points here: first, the dividend of €1.2 billion for the full year -- 2019, which amounted to €1.2 billion had been cashed in the third quarter. Second, we have other liabilities improving the cash flow by €586 million. This position includes tax provision based on the strong Q3 sales and restructuring measures with an expected cash-out in Q4. So some seasonality. And third, the remaining cash-ins in the third quarter for the short-term work that took place in second quarter. And in terms of the EBIT in Q2 cashed in, in the third quarter. Now, let's turn to truck and buses on page 10. We could also see a significant sales recovery, compared to the first half of the year on the trucks and bus -- on the trucks side. Unit sales in the third quarter of 2020 decreased to 99,000 vehicles versus third quarter 2019, primarily due to the ongoing worldwide effects of the COVID-19 pandemic. Nevertheless, the incoming truck orders in most of the key regions in the third quarter were significantly above Q2 numbers and even exceeding the Q3, 2019 level, including core markets in Europe and North America. Obviously, also at trucks, we are keeping a strong focus on cash preservation measures. Strict cost control and progressive execution of restructuring activities resulted in a noticeable reduction of fixed costs as well. On the product highlights of the quarter, in trucks, was a presentation of the hydrogen-based fuel cell concept truck for the long distance segment, with a range of up to 1,000 kilometers. Additionally, the purely battery electric eActros long haul will be ready for serious production in 2024, with a range of approximately 500 kilometers on one battery charge. Furthermore, we introduced two more new models to the market, the new Western Star 49X in the North America and Mercedes-Benz in Turo with Active Brake Assist 5 in Europe. With the brand-new vocational Western Star truck, we see opportunities to gain market share in the vocational segment, same as we did with Cascadia in the Highway segment. It is the first of its kind that was specifically developed for the vocational segment. On the sales, a bit more in detail on page 11. The major markets improved visibly in the third quarter, after the severe losses in the first half of the year. At the same time, the market share increased in almost all markets. In most regions, however, unit sales were still significantly lower than in the third quarter 2019. We're coming from an extraordinary high level of sales in 2019. As we know, by the end of Q3, we were able to see some signs of normalization in the core markets in North America and Europe, as I mentioned on the order side already. Recovery in the Asian market is somewhat more difficult, as in particular, in India and Indonesia demand slumped and is still suffering from the ongoing severe effects from COVID. So looking at the key numbers on page 12. The revenues decreased by 20% to €9.2 billion. We sold approximately 94,000 trucks, so that's 25% less than the quarter before. Buses even declined by 43% to 5,100 units. The EBIT adjusted is at €603 million. Adjusted return on sales was at 6.5%. Incoming orders exceed the prior year figure by 3%. In particular in North America, the September numbers were strong and more than doubled compared to August numbers. Trucks Asia orders declined, mainly driven by Indonesian and Japanese market cooldown. Book-to-bill was at 105%, coming in particular from Asia and a solid level in Europe and North America. And on the cash flow before interest and tax, we see €1.1 billion, which is an increase of 55% and a pretty decent cash conversion rate. Page 13. On the EBIT walk, we see a negative year-on-year change, obviously, due to the decline in the volume. On the industrial performance, we see a charge which is actually the 2019 quarter three favorable adjustment on Takata which, obviously, we don't have again this year. Without that, we're more or less almost balanced on the industrial side. Cost and capacity adjustment in response to the COVID-19 pandemic; and a significant reduction in fixed costs, especially in selling expenses and reduction of functional and overhead costs helped to soften the decrease in earnings and to get to €600 million EBIT adjusted and 6.5% return on sales, also with some support of lower R&D. Page 14, on the cash flow walk. So the CFBIT of the third quarter was more or less twice as high as quarter three EBIT. Cash conversion rate therefore increased to 2.1%, which probably cannot repeat at each and every quarter, I would say. One key lever was the working capital development with an impact of €184 million, similar to Mercedes-Benz and cars. Depreciation exceeded the net investments by far and made a positive contribution to cash flow. New vehicle stock levels remained stable compared to prior year. Used vehicle stock could be reduced significantly in the third quarter by 18%. The provisions and other column mainly include the following elements. Contract liabilities in connection with extended-warranty contracts increased as more extended-warranty volume was added than payout needed. Second, liabilities from signed but not yet paid contracts from the restructuring program were materialized and the affect with EBIT already did not lead to a cash outflow so far. And furthermore, there has also been some provisioning, which will reverse in Q3, so we have some seasonality between Q3 and Q4. Turning to mobility, page 15. We could see the business stabilizing in the third quarter. In the first half of the year, we supported our customer base with temporary payment holidays to handle the financial burden from the COVID-19. These payment restructuring programs expired in most markets and the majority of our customers are returning to normal payment modes. We are back to around 95% of deferrals in zero days past due. After the fast reaction in the first half of the year, no further increase of credit provision was necessary in quarter three. Actual credit losses were at a normal level. The current level of credit reserves provides adequate coverage for projected net credit losses, taking market and economic uncertainties into consideration. At Daimler Mobility, the execution of our efficiency measures shows a positive impact on the earnings. Absolute OpEx figures go in the right direction. Due to the ongoing pandemic and therefore reduced customer traffic at our dealerships, we were able to further sustainably roll out digital self-service usage by our customers and our dealers. Maybe to say as well that for DMO, we are putting financial services at the front and the center again. We focus on customer loyalty and retention in our core business, financing, leasing, insurance and fleet management. And we also manage diligently our shareholdings in mobility services. Page 16, if we look at the numbers, I already said that the business stabilized and that was 2% up compared to the third quarter last year so amounting in terms of new business to €18.7 billion. The contract volume is €150 billion by the end of September. That's 8% down. We could see a slight improvement in the insurance business with around 640,000 policies being brokered in the third quarter. The level of acquisitions is slightly higher year-over-year, mainly driven by the business in China. The EBIT adjusted was up 28% to €601 million. Let's have a look at that on page 17 how we could get there. The development was mainly driven by lower cost of credit risks versus last year due to the quick recovery, so -- sorry. No due to the quick response we did to COVID-19 earlier this year in quarter one and two. And obviously the cost saving measures which we implemented we can see the traction. If we move from the left to the right, we see a pretty minor, I mean, FX development. Besides that in terms of cost of risks, the proactive and conservative approach, which we took in H1 means that we did not have any further increase in credit provisions in quarter three. As in last year's quarter three, we had a risk provision. The year-on-year effect obviously is positive. In the context of streamlining our IT architecture, this is what you can see in the volume and the margin bucket and a bit also in G&A bucket. We had an impairment of software assets. And overall, as I emphasized already, we also managed diligently the cost base and the fixed cost in DMO, allowing the €600 million EBIT adjusted. So, on the group, page 18, if we sum it up basically over there. And we commented already, I mean the divisions, so the only other point I would highlight here is that in the recon, we included an impairment for our participation in BAIC motors of €180 million. On the group level, we had adjustments of €409 million all together. €407 million comes from the efficiency restructuring measures. €68 million is another adjustment and alignment for the production network, in particular, for the intended sale of our plant in Hambach. The total legal proceedings and related measures for the group amounted to a net of €2 million. On page 19, if we wrap it up also on the cash flow side for the group. The particularly high free cash flow at the group level this quarter came mainly from the various elements we discussed for the divisions in cars and vans and trucks and buses. We see minus €24 million in income taxes which includes internal tax prepayments. Furthermore, we received tax refunds in the U.S. that were overcompensated by tax payments in other countries. The bucket other reconciling items contains among others, the reversal of positive non-cash effects in CFBIT of cars and vans from adjustments in the pension and health care plans in the U.S. in the magnitude of a low triple-digit-million figure. Well, now let's turn to the short-term future, page 20, in terms of the outlook for the fourth quarter and the guidance. What does it mean now for the remainder of the year? First, I think I really want to emphasize that given the very, very recent events in terms of the pandemic, I mean somehow coming back, it was quite a lot of uncertainty. Therefore we assume -- and again it's important. We assume that the economic conditions in most of our important markets continue to normalize in the fourth quarter; and that in particular no further setbacks occur or shutdowns as a result of the COVID-19. This is the underlying assumption in this guidance here please. Furthermore, we assume that the significant sales losses which we recorded in the first nine months due to COVID-19 will only be partially offset by the end of the year. We therefore expect the group revenue in 2020 to be significantly lower than in previous year. Same applies for cars and vans, trucks and buses. In DMO, we anticipate a slight decrease in revenues on the basis of the expected market development and the current assessment of our divisions. We assume that group EBIT in 2020 will be at prior year level. At cars and vans division, we're adversely affected by substantial special items in 2019. We anticipate EBIT for this division significantly above the prior year level despite the effects of COVID-19. For trucks and buses and DMO, we expect EBIT significantly below prior year. We anticipate a significant increase in the free cash flow of the industrial business compared with the previous year. The free cash flow of the industrial business does not take into account possible expenses in connection with legal and the governmental proceedings. As part of the measures we are taking to safeguard liquidity and cut costs, we're also reducing our investment in PPE and R&D. However, we'll continue to maintain the advanced expenditures to serve -- to secure the future viability of the company. Overall, we assume that investments in PPE will be significantly below prior year and R&D expenditure will be slightly lower than 2019. Page 21, if we look at the outlook for the divisions, again, on the basis of the assumptions I highlighted before for the development of the major markets, the division's current assessment is that we will have total unit sales in all divisions in 2020 significantly below previous year. We expect for Q4 at cars, vans, trucks to be above quarter three 2020, but below quarter three -- quarter four 2019. Besides positive momentum from the markets, we expect the cost measures that have shown favorable impact in quarter three to continue in Q4 despite some seasonal ramp-up in costs in Q4. The individual divisions have the following expectations for adjusted returns in 2020 full year; cars and vans adjusted return on sales 4.5% to 5.5%; trucks and buses, adjusted return on sales 1% to 2%; DMO, adjusted return on equity 9% to 10%. On the cash side, we will continue our cash preservation measures in the fourth quarter that I've pointed out earlier. However, there were some favorable cash elements in quarter three that will lead to cash-outs in quarter three. For the full year 2020, we expect the adjusted cash conversion rate for cars and vans to be at one, target being maybe above. For trucks and buses, the adjusted cash conversion for the full year is at two. So, please keep in mind that this assumes the economic conditions in most of the markets to materialize and again no further setbacks from COVID-19. So, now it's time I think to wrap it up. Page 22, you can see that this was a solid quarter, but we will not rest on that. Some of the cash and the cost measures are one-timers, so some of the costs will return to us for example I mean on the marketing side that have been largely kept down this year. Nevertheless, this quarter shows us that we are able to achieve, as -- what we are able to achieve as we focus on our core and our strengths. We have communicated, I mean a strategy for cars, but it is also set for vans, for trucks, for buses, and for DMO, and the whole group. We have gone through a target setting. You saw it for passenger cars. But we did the same thing for all of the elements of the group for trucks and buses, for vans and DMO and the whole group. We presented it I mean for cars and vans to you, on the 6th of October. We have successfully pushed forward I mean the efforts regarding cost control and cash management. And with this momentum, we are on track to make our business more border proof. However the transformation of Daimler is a long-distance race a multiyear endeavor. We are keeping up the pace with focus and full discipline. Quarter three has shown what we can do in this respect with all hands on deck and hard work. And with this we tackled quarter four with confidence and as you can see it in our full year guidance. I think I was a bit too long today, apologies. So I'm looking for your questions now.

Thank you very much, Harald. Ladies and gentlemen, let's directly start with your questions now. Please ask your questions in English. And as a matter of fairness, please limit the amount of questions to maximum of two, to get sufficient opportunity to ask questions. The operator will again explain the procedure.

[Operator Instructions] The first question is from Arndt Ellinghorst of Bernstein. Your line is now open.

Morning everyone, and thanks for taking the question. One question please. So you will report a free cash flow of about €4 billion to €5 billion this year, which is amazing, in a year of some of the most historical challenges for your business. Harald and Ola, if you keep and accelerate some of the cash cost savings -- and as you said, you're moving to a better managed supply side, so you should strive to have better pricing more sustainably in your business. What speaks against the conclusion that, Daimler should be able to conservatively generate, €6 billion to €8 billion of free cash flow in a normal year, if not €8 billion to €10 billion of free cash flow? Thank you.

Well, thanks Arndt. Is that a question, or is it a statement? Well, I like your numbers. And as you can see in the quarter three, we are working hard on it. I'll think with the quarter four guidance, you see that we want to continue in that direction even so Q3, I have to emphasize included some seasonality, which we will see the impact of that, I mean in the fourth quarter. You could see as well with the margin targets which we announced on the 6th of October for cars and vans, that we're very serious about that. And I think I reminded you as well, that we have the objective to convert that into cash, at cars at around I mean 0.8, at trucks closer to one, 0.9. So I think for cars and vans we said 0.7 to 0.9. So -- and that's really what we're working hard. And yeah, I mean quarter three is a bit of a testimony for that, but certainly a lot of work remains to be done.

Thanks for that.

The next question is from George Galliers of Goldman Sachs. Your line is now open.

Thank you for taking my question. Just on the cash flow. I actually wanted to just ask, the lower investments in PPE. Can you just help us to understand? Is this coming from efficiencies, reduction in complexity and curtailment of model programs, or has there also been any change in Daimler's approach to investments in vendor tooling? And I'm not sure the extent to which you actually pay for vendor tooling today.

Thanks George. Well, I mean, in 2020, I mean we started the year with investment cap. And we talked about that last year. So we put that into place. But then, I mean with COVID we clearly accelerated and took that cap down. And therefore, I mean, in 2020, it's really about prioritization of PPE. What does it mean? Each and every project-related investment, on the R&D side as well as on the PPE side, I mean in essence has been continued, as you can see, with a timely and successful launch of the S-class. And I mentioned before, that we will not compromise on the new C-class. And we'll not compromise on the EQS, nor will we compromise on an investment in software and in electric. But non-product-related, I mean PPE has been really I mean scrutinized. But we did not change structurally the approach towards suppliers in terms of them taking the bill and amortizing over the series, or in terms of I mean pushing payment terms out.

Understood. Thank you. And then just the second question, obviously, a very strong quarter in China as you pointed out, and BBAC I think your share was over 360 million. Just in terms of the opportunity there going forward given Chinese dealers are talking about extremely strong order books for your cars and other premium brands, are you facing capacity limits in China today, or is there actually room to increase production and see stronger results through 2021?

Well, I mean we -- let's talk here about, I mean 2020. We gave the outlook for the fourth quarter. I mean, definitely you're right, a very strong quarter also expected in China for the fourth quarter. And definitely we are using our global -- worldwide and industrial network to support the demand in China from the local ones, but also obviously from the ones in the U.S. and Europe. On top, we are ramping up production footprint also in China with an additional plant in the north of Beijing, which will offer us more capacity from next year onwards. So definitely we're getting ready to take our decent share.

Great. Thank you very much.

The next question is from José Asumendi of JPMorgan. Your line is now open. José Asumendi: Good morning. José, JPMorgan. Harald, a couple of questions please. The first one on the labor reductions that you have target in terms of euro billion, how far are you through these labor reductions maybe 50%, 60% through? And can you comment a bit on the selling expenses both for Q3? And what kind of magnitude should we expect for fourth quarter please? The second question relates to China dividends. Should we expect another inflow in the fourth quarter? Thank you very much.

Thanks José. Yeah, so first I mean on the labor, no, we are not 60%. So -- I mean, we -- you can see that. I mean, the workforce level is turning. So we're coming down at the group level and at the division level. I mean, if you look in the spreadsheet and the fact sheet. I didn't emphasize so much, I mean, the head count numbers here but I mean it's definitely turning at the group level with a lot of emphasis obviously on the white collar reduction. But I mean the bulk of white-collar reduction, which we announced last year, and which we stepped up in terms of effort, i.e. going beyond that and in terms of size as well as in terms of time is yet ahead of us, but the momentum we could generate you can measure it as well in the charges related to the restructuring in the adjustments is ramping up. If you compare the numbers I gave on the 6th of October, I think I was talking about 1,100 packages being signed up in the -- by the end of August. That number is as we speak moving closer I will say to 2,000 already. So I mean, I don't want to overemphasize but I think we are moving in the right direction here. On selling expenses, I commented before that we had really a pretty brutal brake on it. So we might lose some of it as we will support key market entrants in terms of products end of year and next year. So we'll not compromise on that. We also had a bit of a favorable impact from the pension stuff in the third quarter in the U.S. at a low three-digit amount as I commented. So on a run rate basis I think you need to add back a bit of cost in the fourth quarter, and also I mean for 2021 obviously. And your third question on China…?

China dividend.

China dividend. Well, we cashed in the full dividend for 2019 need to see the phasing of dividend for 2020. José Asumendi: Thank you.

Thanks very much.

The next question is from Tim Rokossa of Deutsche Bank. Your line is now open.

Yeah, good morning. Thanks for taking my question. Harald a bit into Arndt's and George's direction. Obviously the majority of investors are asking us right now how sustainable this free cash flow generation is. So can you help us understand? Similar type of run rate, volume, pricing and China dividend wise, would a normal free cash flow in Q3 be in something like €4 billion or even slightly above €4 billion, or can you at least give us some sense in how much of this was unique to Q3 and probably still a little bit to Q4? And then the second question, when you do say CO2 targets are in striking distance, is that in Daimler language basically meaning that you're going to make it, or do you see some real risks still that you will miss this? And is this related to 2020 only or to 2021? Thank you.

Well, I think my comment was on 2020 on the CO2, if I pick up on this first. I mentioned 45,000 xEVs being sold in the third quarter. If I add the first half to it -- and we see the level of demand really picking up in the third quarter, it's a matter of product availability if I may remind you that. The demand for the plug-ins offering I think an unmatched autonomy and range availability makes us confident that we will see that demand continuing in the fourth quarter. And this all together brings us in striking distance to the CO2 targets for 2020. Definitely, we'll carry on with that momentum in 2021, but I think it's to comment about that at a later point in time. So, let's focus now first on 2020. In terms of the cash flow normal run rate well, maybe if you look in the quarter three. I think, it's pretty obvious, if you look at MBC, but also at the group level that you cannot take I mean the €1.2 billion dividend from China as a run rate. So, I mean -- so I will take that off yes. And that obviously is I mean you have the reversal of the at-equity result in the third quarter on the other side. You need to take the net of the two. And you could see as well that there were some seasonality in the quarter three in the other column which I commented. So, all in all, I think in the fourth quarter, you will therefore see a cash conversion rate both I would say for cars and vans as well as for trucks and bus below one time as we will see the reversal of these impacts. On a normal level moving forward, I make reference to the cash conversion targets, which we outlined sitting at 0.7 times to 0.9 times for cars and vans and the 0.9 times for trucks. I think that's what we're I mean striving for. That doesn't mean that we might not catch one or the other onetime working capital opportunity in the future, but on a sustainable basis, that's what it should be. And obviously, our margin aspirations should come through in terms of cash flow.

The next question is from Horst Schneider of Bank of America Merrill Lynch. Your line is now open.

Yes, good morning and thanks for taking also my questions. I've got two follow-ups please. The first one relates to the selling expenses, where we continued to see quarter-by-quarter significant surprises in terms of savings. Can you maybe let us know? I mean you -- I know you talk about this normalization in Q4. You alluded on that. What is the sustainable level of selling expenses as a percent of sales that we can assume going forward? Then the second question that I had, that was related to a more general one on working capital. I have the impression that you have even not yet started to restructure the working capital significantly, so can you maybe explain to us again, why you don't do to a larger extent for example factoring? And then also in general, on the working capital, to which extent do you expect basically the structural level of inventories to come down? I mean, you want to be more luxury in the future and luxury means to me also that you should increase the build-to-order basically. So, can we assume a structural improvement of inventory levels going forward? Thank you.

Thanks, Horst as well. So, maybe on the selling expenses side yes, a pretty strong brake in 2020. On the 6th of October, we said that we want to take the fixed costs down all in all by more than 20% compared to 2019 level. So, that's what I would assume as the long-term run rate I mean. Therefore, I mean you depart from 2019. So, there we'll therefore see some of the costs compared to the quarters we had now in 2020 coming back a bit. On the other side, other areas I mean, we'll step up. Obviously, structural cost adjustment in other areas including the operational side, on the operations side take a bit longer time and -- to be implemented. So you will see therefore I mean, the mix of measures changing over time, so more on selling this year, more on others in the quarters and in the years to come. On working capital. Well, if you allow me to say 2020 was really -- or it is the emphasis on managing diligently production and sales with a huge volatility as we all know. And I think that's worked pretty well so far as you could see with the quarter two cash flow and even more with the third quarter cash flow. And we'll continue to do so in the fourth I mean. And that has rather beneficial element -- I mean impacts not only on the inventory side. I commented before, I would also say that diligent, I mean prudent supply of the markets is helpful for pricing. It's good for the residual values and it's also good for the used car level. I commented before that on trucks, we had a good reduction of the used vehicle level in the third quarter. I can say as well that in the cash flow of cars, we have reached I mean a very decent lower level of used vehicles as well. That's the emphasis for 2020 balancing and matching here supply and demand. I clearly still see a potential in terms of further working capital structural improvements. We'll not keep -- lose our focus and an eye on it, but I think that's more for 2021 and beyond to address it. Once market situation hopefully will stabilize again, then I think you can address more structural inventory improvements and also turn back in terms of payment terms. If you think about, I mean payables, probably it's not the right moment in time, I mean right now where the supply chain and some of the suppliers going through quite some stress and pressure. I mean closer probably to insolvency risk, I mean to knock at the door for extension of payment terms as well, but definitely, it's on our agenda, but I would say more for 2021 and beyond.

But you don't consider to do additional factoring, right?

We don't consider in the numbers we've reported, nor the ones we gave you today any material factoring.

And on SG&A, I think you don't want to comment on the level of reversal in 2021 that you mentioned, right?

I think I said I mean at the beginning, let's focus here today on quarter three and the full year 2020 guidance. And we'll talk about 2021 probably more in February.

Okay. Thanks very much.

The next question is from Patrick Hummel of UBS. Your line is now open.

Thank you. Good morning, Harald and Steffen. Two questions also from my side. The first one regarding the xEV sales, it's good to hear you're in striking distance. I was wondering on the contribution margin side for the plug-in hybrids. It really looks like a strong demand environment. Consumers happily take the incentive granted by the government. So where are we in terms of the contribution margins for the plug-in hybrids relative to conventional gasoline and diesel cars? Any indication would be helpful. And the second question is a bit more high level. I mean, you and Ola are taking really structural measures, harsh decisions also correcting things that might have gone in the wrong direction in the past. And I'm just wondering. We haven't heard much about trucks here in a group context. Do you still think that trucks should be 100% owned by Daimler AG? And why do you think that is the best solution for shareholders? Thank you.

Thanks, Patrick. I mean let me start with the second one. I think with what you see in the third quarter, there is traction also on the -- on trucks side in terms of cost adjustment next to market recovery in the third quarter. So really focused on improving the operational performance of the business. That's our priority and therefore, I have nothing new to say with regard to the structure and the shareholding of trucks here. On the xEV and the plug-in margin, what can I tell you at this stage? We have a positive contribution margin definitely. That is for sure, but I mean, it obviously sits, I mean somehow I mean below, I mean the conventional. The ICE margin is -- the variable costs of the car I mean, due to basically, two propulsions systems being onboard is impacted. We'll see how that will develop moving forward. We definitely are working on the contribution margin of the xEVs or the plug-ins as well on the best moving forward. Clearly, we have an ambition to improve that over time by various levers in particular obviously on the battery side, but not limited to it. So positive contribution margin, but not at the same level as the ICE as of today. In the third quarter, we have some dilution from the step-up to the 45,000 xEVs. As I commented that is included in the minus €333 million in the EBIT walk, but you can see that globally managing all levers including costs obviously fixed costs, pricing mix, I think we can deal with it. So I'm looking with more confidence after the quarter three in terms of being able to manage the dilution of xEVs.

Great. Thanks, Harald.

The next question is from Stephen Reitman of Societe Generale. Your line is now open.

Good morning, Harald and Steffen. I have two questions. Just again on the subject of meeting the EU CO2 mandate or being close to that in 2020. I mean looking at the last data from the ICCT, which put you at sort of 15% below your target at the end of August on an NEDC basis with a share of new energy vehicles of about 21% in August alone. How high do you think you have to go in the fourth quarter in order to get closer to the target? And would you rule out joining an emissions pooling scheme? And my second question is about the mobility services. And there's been some speculation in the press about Uber being interested in the -- you're now in the sort of taxi business. What is Daimler's thinking about the future direction of that business? And do you think still that it should be part of the Daimler Group? Thank you.

Thanks, Stephen. Well, if you look at quarter three, you'll see a pretty impressive ramp-up of the xEVs. I gave the number already several times now 45,000 all together, majority of that obviously being plug-ins. So our expectation for the fourth quarter definitely is that the number is going to be higher than quarter three as we will continue the ramp-up rates, which we could see now decently July to August, August to September. So we'll keep going on that path, I mean for the fourth quarter. And again it's supported by the strong demand for these products with the exceptional range they offer. And I think more and more people are really convinced of that and therefore I mean we enjoy that high level of demand. So the fourth quarter again expectation in terms of sales for the xEV is in excess of the third quarter. This all together brings us I mean in that striking distance. We're reviewing obviously the grid on a permanent basis including the phase-in credits and all of the other measures to bring us into the target zone. On mobility services well maybe thanks for the question as we didn't talk during the call so much or not at all about it. In the first half of the year, I mean they had been hard by the COVID-19 as well. I think a good recovery now in the third quarter on the operational side. They also have been doing I think I mean an outstanding job in terms of cost control and discipline here. We don't have time to go much more into that in detail. So they have a clear slope in terms and paths to recovery. In 2020, jointly with BMW, we defined as well I mean the way forward for each of them towards breakeven I mean and beyond, so there is a clear direction from a strategy side as well as from an operational business standpoint. At the same time, I think we said from the very beginning that we are open I mean to partnerships in the various verticals. That was the spirit of the JV, the partnership with BMW from the very beginning; and this is the same. And in this respect I mean we are exploring several options. That's what I can tell you on this today.

So ladies and gentlemen, we're running out of time. Thank you very much for your questions and for being with us today. And also thank you very much to Harald for answering all your questions. Now investor relations remains at your disposal to answer any further questions you might have. To all of you listening in from Internet and on the phone have a great morning, great afternoon or great evening. And we obviously look forward to talking to you soon. Thanks and goodbye.