Welcome to the global conference call of Daimler. At our customer's request, this conference will be recorded. The replay of the conference call will also be available as an on demand audio webcast in the Investor Relations section of the Daimler website. The short introduction will be directly followed by a Q&A session. [Operator Instructions] I would like to remind you that this teleconference is governed by the safe harbor wording that you'll find in our published results documents. Please note that our presentations contain forward-looking statements that reflect management's current views with respect to the 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 Treasury and Investor Relations. Thank you very much.

Good morning, ladies and gentlemen. This is Steffen Hoffmann speaking. On behalf of Daimler, I'd like to welcome you to our Q3 Results Conference Call. We are very happy to have with us today Harald Wilhelm, CFO of Daimler and Mercedes-Benz, and Jochen Goetz, CFO of Daimler Trucks & Buses. In order to give you maximum time for your questions, the two gentlemen will begin with an introduction, directly followed by a Q&A session. The respective presentation as always can be found on the IR website. Now I'd like to hand over to Harald.

Yeah. Thanks, Steffen. And good morning, everybody. We have quite a lot of material, so I will try to be rather quick maybe in rushing through it so that we will have sufficient time for the Q&A. So let's jump right away to the key messages for the third quarter. Despite considerably lower production and sales due to the ongoing semi shortage, we significantly improved our top line quality at Mercedes-Benz Cars & Vans, with better product mix and optimized pricing. Combining this with a tight grip on fixed cost, the result is a significantly lower breakeven point and the higher robustness of the business. The good results combined with discipline in working capital and investments translate into a comfortable level of free cash flow and the net industrial liquidity and supports our financial flexibility. Furthermore, in terms of strategy execution, we have made progress throughout all divisions. At the International Auto [ph] Show in Munich, you have seen further family members of our Mercedes-Benz luxury, full electric lineup. And on the truck side, we set another important step some weeks ago by starting the series production of the battery electric eActros. Within the past weeks, we reached further milestones of project focus. Backed by the strong shareholder support, we currently prepare for the next step of the spin-off. The Tracker [ph] Truck Capital Markets Day on November 11 and the first trading day of the Daimler Truck share before the end of this year. Let's jump now to the new reporting structure on page three. The group figures within our financial statements are now split into continued and discontinued operations. Continued operation contains mainly Mercedes-Benz Cars, Vans, Daimler Mobility and the reconciliation positions. Please bear in mind that also DMO is here, including trucks DMO for P&L, which will be successfully carved out or ramped down over time. Further details are described on page 11 in our interim report. The discontinued operations are defined as major line of business to be spun off. This contains mainly the industrial business, trucks and buses and is displayed a separate single line item in the P&L in net profit covering EBIT, interest and tax. Group revenue and group EBIT in the P&L does not include discontinued operations from trucks and buses. For transparency and comparability reasons, however, we keep the Q3 segment reporting unchanged, as you will see on the subsequent pages. In Q4, the Trucks & Buses segment will be displayed in our reconciliation position, reflecting the structure post spin-off. So what are the numbers? Page 4, well, 578,000 cars and commercial vehicles being sold, that's 25% less than quarter three 2020, despite significant lower volumes, revenues was about at last year's third quarter. Q3 EBIT increased by 17% to €3.6 billion, FCF Industrial business was 2.2%, NIL increased by 31% to 23.5% year-to-date. And you can see also in light blue, the impact from discontinued operations. Let's zoom on Mercedes-Benz Cars & Vans, page five. We see a strong demand for our products in all markets, in particular, electric and high-end Mercedes-Benz vehicles have robust growth rates. So sales evolution is a result of semi shortage and not, not market demand. On the financial side, the exceptionally strong mix and favorable net pricing can offset the headwinds from semi-driven supply constraints and raw material increases. I will give you more color on this later. We're also working on our strategic implementation and transformation towards electric only. We're doing this by investing into BAF [ph] and ramping down eyes [ph] Therefore, we announced to acquire an equity stake in the battery cell manufacturer, ACC to develop and build next-generation battery cells and modules in Europe, together with Stellantis and TotalEnergies each partner holding 33%. On the eyes [ph] we're making another step in the powertrain transformation. We will transfer the development and manufacturing activities for next-generation compact and midsized transmission to our partner, Magna. We thereby reduce our in-house activities for conventional drive components in the coming years. The future of Mercedes is all electric, and we will be ready to offer our customers up to 100% best [ph] by the end of the decade. At the International Auto Show, we presented new products and concepts that underline our focus on luxury EV and tech. Hence, we are very pleased with the early order intake for EQS at this time. Since we opened the books for the EQS on August 10, European orders reflect similar level of demand as we have seen for the Mercedes-Benz S-Class. Feedback from the U.S., which is in the midst of launching the vehicle is also very encouraging. And in China, we have not opened our books yet. On the numbers, page six, due to the semi shortage, the sales at cars and vans dropped by 30%. Revenues, however, remained at about last year's level. EBIT adjusted 2.2, CFBIT 4.1, cash conversion 1.9%. Page seven. As we flagged already, Q3 was impacted by the semi shortage and that the dent in production and sales. However, we have achieved a very strong top line quality driven by the exceptionally favorable structural effects and improved net pricing. The very strong mix came mainly from S-Class, GLS and GLE. Improved net pricing for new and used cars with low discount levels came across all regions. FX effects from the Russian ruble and the U.S. dollar affected the results negatively. On the industrial performance Q3, you see two headwinds that we have flagged earlier as well. First, higher raw material effects due to increased market prices, and second, production network disruptions due to the semi shortage. Let's have a look at the fixed cost, the negative selling expense in the bucket here is due to year-on-year positive onetime effect that we had recorded in Q3 last year out of U.S. pension and health care plans. R&D came in with €155 million negative year-on-year, which reflects, as guided for the full year, an increase according to our technology roadmap. As a general remark, I mean, on the fixed cost and headcount, I would like to say that we are on track towards the commitments that we have laid out at the strategy update. Our fixed costs are approximately 15% below the 2019 level, and the indirect workforce in Germany has been reduced by more than 4,400 maybe even full time equivalents versus 2019. In the other lines, the most prominent effects are impairments due to the charge point mark-to-market valuation and the lower BBAC equity contribution, which is a direct consequence of the semi-driven supply constraints. On the cash flow, page eight, the CFBIT report came in at 3.7%, adjusted 4.1, leading to a cash conversion rate of 1.9%. This is above our current market guidance, mainly because of the lower vehicle inventories and the BBAC dividend that was recorded in July. Working capital decreased by €1.2 billion, driven by low trade receivables and lower inventories, in particular due to the very low finished vehicles stock. The unfinished product bucket increased given the semi shortages. The minus 228 net financial investments are mainly due to YASA acquisition, which is part of our refocused strategy for high-performance EVs. As you can see, the net investments in PP&E and intangible assets versus depreciation, amortization impairments is positive, reflecting our disciplined approach in terms of capital allocation. The other line includes mainly the adjustments of the BBAC at equity result and the dividend from BBAC. On the adjustments, we have payments with regard to legal proceedings and payments made in connection with the personal cost optimization program and our M&A transaction, YASA. With this, I hand over to you, Jochen, for Daimler Trucks and Buses.

Thank you, Harald. And also from my side, a warm welcome. Trucks very similar what Harald just mentioned on the passenger car side, the third quarter was a very challenging one, where operations [ph] and financial performance was significantly impacted by the supply chain, mainly shortages on semiconductors. The stressed supply side for sales of the third quarter below the level of second quarter with a major impact on our North American and European heavy-duty business. However, we have done everything to finish the vehicles as far as possible so that we can deliver our trucks and buses to customers over the next weeks and months. The demand is still very strong, significantly stronger than what the supply side allow for production capacities at the moment. We had a very solid September month, however, the visibility is still low, and this might remain at least for the rest of the year. I'm very pleased with the net pricing development. In the third quarter, it helped us offsetting some of the raw material headwinds and supply chain-driven constrained costs. We have opened our 2022 order book in North America with record incoming orders for the first days. Book-to-bill was at 156%. And September was the second highest order intake month in the history of Daimler Truck Group and our order book is at a level we haven't seen ever before. Talking about our products. End of September, we introduced the new editions to our Western Star purpose-built vocational lineup, the all new Western Star, 47X. The truck complements the Western Star 49X and extends the platform reach into an entirely new vocational application. Also in September, we launched our all-new tour rider, a Mercedes-Benz motor coach, tailor-made for North America offered in two model variants to either business and to either premium. And last but not least, on the transformation side, in early October, we set the base for leading the way to zero emissions by starting the series production of our battery electric eActros, rolling after production line at our Mercedes-Benz plant [indiscernible]. Let's look at the key financials. Year-over-year sales increased by 7% to 106,000 units in the third quarter. While the heavy-duty volume in Europe and North America were lower than Q3, last year, the overall growth is supported by higher sales in Asia and in Latin America. However, due to production constraints and lower sales in our heavy-duty truck markets, revenue of Daimler Trucks & Buses consequently decreased by 4% to €8.9 billion. The strong unfavourable regional and product mix caused the adjusted EBIT to decrease by €114 million from €603 million to €489 million. Consequently, adjusted CFBIT decreased as well significantly by €1.7 billion from €1.1 billion to minus €527 million. Now let's take a closer look at the EBIT development. Volume structure net pricing came in with positive contributions of €150 million year-over-year despite a negative volume and structure effect caused by the lower European and North American sales and still challenging situation on the coach and line segment at Daimler Business [ph] However, positive contribution came from the used truck business, and again from aftermarket on top on improved performance from Latin America and TransAsia, Small negative effects related to FX, regarding the industrial performance, the third quarter was burdened mainly by higher raw material prices, especially steel, as well as constrained costs. We expect this to continue in the fourth quarter. In the third quarter of last year, we had a significant reduction, especially in selling expenses, as well as functional and overhead cost in response of the COVID-19 pandemic. Keeping that level and even improving G&A expenses show that we are on a good track improving our cost position. In the others line, we saw a positive onetime effect from the revaluation of our Chinese joint venture, Beijing Foton Daimler Automotive and the fair market value adjustment of our common shares. Those positive effects were offset from valuations due to a stock price decrease of our investment in Portera [ph] This leads to an adjusted EBIT of €489 million with a return on sales adjusted of 5.5%. The mentioned other effects contributed with roughly 1% to this development, including the adjustments from expenses for personnel cost program of €60 million and compensating onetime effects from our sales-centric joint venture of €9 million. EBIT reported came in at €482 million with a return on sales of 5.4%. Let's turn to the cash side. The semiconductor shortages caused a temporary extraordinary increase of unfinished goods, translating into a more than €900 million negative impact in the €1.1 billion negative working capital. However, please keep in mind that this is a temporary situation because behind every week sitting in our inventory, there is a customer urgently waiting for the truck to deliver. On the positive side, depreciation and amortization once again exceeded net investments in PP&E and intangible assets underlying our focused investment approach. This leads to CFBIT of minus €576 and adjusted for restructuring measures, an M&A transaction towards CFBIT adjusted of minus €527 million. The cash conversion rate stood at minus €1.2 million. So that's briefly the performance of Daimler Trucks & Buses in the third quarter. Before I hand over to Harald again, I want to highlight two major milestones on our way to become an independent listed company by the end of this year. Yesterday, we received the initial issuer ratings from Standard & Poor's and Moody's, assigning strong investment grade ratings, which each having a stable outlook. This will support our growth, as well as our ambition for higher margin. It also reflects our solid financial profile. I'm also looking forward to our future Daimler Truck quarterly disclosure calls, starting with the presentation of our full year results 2021. But before that, and this the second milestone I want to highlight, I hope we will see us again at our Daimler Truck Capital Markets Day on November 11, together with my colleagues at the Daimler Truck management team. With this, I hand over back to Harald talking about Daimler Mobility.

Thanks, Jochen. Independence Day coming up soon. So let's look at the DMO before that. At DMO, the shortage also left its traces, vehicle sales - lower vehicle sales and dealer inventories resulted in a decrease of the portfolio, in line with the rising share of electric vehicle sales, the share of EVs within the new acquisitions increased at the same - at the current stage of the penetration rate for electric vehicles are on a level comparable to the ones of VIs [ph] The financial performance of the division strongly benefited from lower refinancing costs, and there was a higher interest margin. Due to the strong credit quality of the portfolio, no new credit provision had to be recorded. The business performance of both mobility services and fleet management businesses improved as well. The financials, the new business was down by 22% due to the reasons I mentioned before. The reduction of the portfolio was mainly driven by significantly lower dealer financing, while the finance contracts with customers slightly increased. The operating lease rate has been stable. On page 15, on the numbers, the return on equity, 23%, adjusted EBIT rose to more than €900 million in the third quarter. The main driver were lower refinancing costs, which improved the interest margin, no credit - new credit risk provision. In the other bucket, the fleet management business contributed to an improved result. In addition, last year, the division had a negative impact from an impairment of software, which further helps the Q3 bridge. Overall, a very strong result benefiting also from a positive environment, but you should not maybe necessarily take that return on equity as a new run rate moving forward. Let's have a look at the group, page 16 divisions, all explained before. So what's left to explain is at the group level, the adjusted performance. And here, the reconciliation we had last year, Q3, the bike motor impairment of €180 million and no effect this year. Let me also explain, I mean, the adjustments and highlight one point, €150 million within the recon on M&A transactions, which are mainly associated with project focus and the presentation of discontinued operations. These specific impacts are first focus-related transaction cost of €68 million, second, stopping depreciations at Daimler Trucks of assets held for sale of €278 million and DMO contracts of €34 million. And third, effects reflecting mainly to DMO impairments of €102 million. All of that sits at the group level, not in the numbers. So Jochen explained at the division level before. In summary, the Q3 EBIT of our continued operations exceeded Q3 2020 on a comparable basis despite significantly lower sales. On the cash flow, page 17. We explained, I mean, the division cash flow already. So what's left, cash taxes are at minus €600 million, reflects - this expected increase already at the beginning of this year. That leaves us with a €2.2 billion free cash flow reported, adjusted €2.8. Page 18, the NIL, €23.5 billion, the increase comes from the industrial cash flow, obviously of €2.2 billion and some small FX-related effects. Working capital had no overall impact in the quarter. Investments continue to remain balanced versus depreciation €300 million [ph] outflow was mainly in the investments on YASA, which I explained before. Related to the spin-off activities, the net liquidity in Q4 will be impacted in total by approximately €5 billion to €6 billion by the following main effects. First, the initial net liquidity transferred to Daimler Trucks and Buses for the listing. And second, the DMO portfolio transferred to Daimler Trucks, which triggers a respective payback of excess equity from DMO. All in all, our net liquidity remains on a comfortable level after equipping the new Daimler Truck Holding AG with a net liquidity for the solid investment grade rating Jochen just mentioned before. Now let's come to the outlook on page 20. So before I start the guidance, please note, I mean a general remark that all guidance’s are made under the following assumptions. The economic conditions for worldwide demand are likely to remain favorable during the rest of the year. One must assume, however, that strained supply chains and bottlenecks for key components will continue to have a considerable impact on worldwide vehicle production in the fourth quarter. This obviously refers to the supply of semi components and important key products. As we have highlighted around the mini order show, we continue to expect a gradual normalization of the semi supply chain situation in the fourth quarter. But I also want to repeat that we have said several times, the visibility, how the supply situation will actually develop further is still low and suppliers are having problems, making firm commitments. During this period, we have been working with our suppliers to mitigate the shortages. Needless to say, for 2022, we are working with a complete supply chain throughout the tiers to improve stability. The overriding structural shortage of semis is expected to remain an issue for 2022, but should improve compared to 2021. Therefore, this topic will continue to have top priority in our strategy going forward so that Mercedes-Benz can continue to serve its customers by delivering luxury vehicles. How do we see the market guidance for the full year 2021? Due to the shortage in semis, we see changes in the guidance versus our last disclosure for car and van markets. The market guidance for heavy-duty truck markets remain unchanged despite the semi challenges. Based on the expected global economic development, we anticipate now only a slight increase in worldwide demand for cars this year. For the European car market is now expected at only prior year level. For the U.S., we now expect only a slight increase. And for China now a market at the prior year's level. Large and medium vans in Europe is still expected to significant [Technical Difficulty]

Ladies and gentlemen, we seem to have a technical issue. Please stay on the line while we fix this. Thank you for your patience. Ladies and gentlemen, once again, we seem to have a technical issue. Please stay on the line while we fix it. Thank you. Ladies and gentlemen, thank you for your patience. We will now continue the conference call.

Okay. Apologies for that. Seems supply chain problems also sneak in, in this call - So let's start again, maybe on the page 21, as I'm not sure everybody could follow. So in terms of unit sales of cars and vans, supply constraints in Q3 have led to a significant impact as shown earlier. The lost volumes cannot be recovered in the remainder of the year. For Q4, we expect unit sales on a more normalized level, closer to the unit sales levels of Q2 or Q1. For the full year unit sales guidance, however, this means that we now expect cars to be slightly below last year, which is one notch below the guidance that we gave in Q2. For vans, we expect unit sales to be at prior year level. Q3 has also shown that we are advancing well on our journey towards higher resilience and safeguarding profitability. For the full year, despite the lower unit sales guidance, we again reconfirm the guidance for return on sales adjusted for cars and vans at 10% to 12%. This would imply a Q4 return on sales adjusted that lies between Q3 and H1. As mentioned, we expect unit sales getting closer to Q1, Q2 levels. Furthermore, we continue focusing on mix, net pricing and cost even so not every Q3 top line effect can be the new normal. On top, we expect in Q4 additional raw material headwinds versus Q3. With a strong cash conversion in the first 9 months, we increased our expectation for the full year rate to 0.8 to 1 before it was 0.7% to 0.9%. On the trucks and buses, this is important here, trucks investors are shown as a reference only and include activities for 12 months. So this is in line with the previous segment structure. No change on this guidance, 6% to 8% was adjusted despite lower sales in Q3 and the CCR at 0.8 to 1%. For DMO, we raised the guidance further to 20% to 22% return on equity adjusted before it was 17% to 19%. We have seen 9 strong and resilient months and expect Q4 to be slightly below the first 9 months as was a gradual increasing portfolio in Q4, the credit risk provisions are expected to increase slightly. At the group level, page 22. There is a change in the guidance methodology due to the effect of the spin-off. On the left, you see the reference guidance, which covers Daimler Group, including trucks and buses for 12 months. This is in line with the previous group structure and is intended as a reference only to show whether there are pure business effects to the guidance given at the last disclosure. On the right, the group guidance covers the Daimler Group for the full year, including trucks and buses until the expected spin-off in December. After spin-off, the respective 35% equity share is accounted for a equity and also considered. Both guidance’s are based on same assumptions as the market guidance. Also for both guidance’s, we continue to expect the group revenue and group EBIT in 2021 to be significantly above 2020. We expect to have considerable positive effects on group EBIT in the fourth quarter, especially from deconsolidation due to spin-off, however, which cannot be reliably determined at present and is therefore not included in the group guidance so far. Now the free cash flow reported, and this is important with the FSCF in Q3 for the reference guidance, we lift up our guidance by one notch again and expect for the full year a free cash flow industrial reported at prior year level. Previously, we had guided slightly below. For the group guidance, that means for the time until the spin-off date, the FCF remains unchanged at slightly below versus previous year. Our reference guidance for investment in PP&E is now at slightly below versus prior year, as the group guidance is even significantly below. On the R&D expenditures, we now expect them to be only slightly above for 2020 for both reference and group guidance, still catering for strategic topics like electric drive and software, before we have guided significantly above. No change to the European CO2 emissions. Q3 showed that we are on track. And now I think we come to the end. So we are in the middle of the biggest transformation of our company in only a few weeks, we'll spin off Daimler Trucks and create the two of the most powerful pure-play OEMs of the industry. On November 11, we will therefore host our Daimler Truck Capital Market Day. So stay tuned to learn more about the exciting future of Daimler trucks and buses. And on the cars and vans side, to underline our pure-play business, we will only name Daimler into Mercedes-Benz Group AG in February, a clear commitment to make Mercedes-Benz the preeminent, leading luxury brand, accelerating into a software-driven zero-emission future, 100% electric. We believe, this focus on our strength has great potential to unleash the full value. Now we're happy to take your questions.

Thank you very much, Harald and Jochen. Ladies and gentlemen, you may ask your questions now. The operator will identify the question by name. But however, please also introduce yourself with your name and the name of the organization that you are representing before asking your question. A few practical points, as always, please ask your question in English. And as a matter of fairness, please limit the amount of questions to a maximum of two. Now before we start, the operator will again explain the procedure.

[Operator Instructions] And the first question goes to Arndt Ellinghorst from Bernstein.

Yeah. Good morning, everyone. Arndt from Bernstein. Two questions, please. Harald, when you look at mix and pricing trends, obviously, at the moment, extraordinarily strong mix coming from S and GLE. As you mentioned, and assume pricing also still quite positive. When you look at the volatility moving forward and into next year, clearly, volume will be positive, but would you also expect ongoing positive really year-over-year improvements in mix and pricing into next year? Or are we at a peak level there? And then also, it's a similar peak question really, I'm sorry for that. But the free cash flow performance remained very strong in the quarter. You're now at €6.7 billion for the group. Is that also a peak level, especially for Mercedes? I understand there's upside for trucks. But within Mercedes, do you still have room for structural improvements of your free cash flow performance? Thank you.

Thanks, Amdt. Morning. Happy to take the two. Number one, on mix and pricing. Well, I think you can see in the numbers, a significant improvement. I think I flagged before maybe that the Q3 cannot be taken as the new norm in terms of the mix. However, the absolute demand, the absolute demand for the top end vehicles, I mean you mentioned GLS, GLE, S-Class, EQS coming is definitely not going down. We could have delivered more. We will deliver more, but maybe we'll also deliver a few more in the compact segment. So maybe therefore, I mean, it balances a bit more back to a normal. We'll see what that will yield then in terms of detailed mix impact, and we'll talk about 2022, the later point, but will not fall back to pushing volume. So don't expect a dramatic shift here, I would say. On pricing, definitely, you know we want to continue that discipline and maintain that revenue quality, the products, I mean I just mentioned before, I think, are the key levers of the weapons, I mean, to do so. So all in all, from today's point of view, maybe a bit of normalization, I mean, in mix, pricing should remain strong. Volume, I mean, should definitely come back in Q4. And well, we will talk about 2022 at a later point in time. But globally, the market demand is so strong that I could expect the market demand translating into higher sales in 2022. But this is for later, I would say. On the FCF side, yes, I mean, there was a good quarter, but a high volatility, I mean, with finished vehicles coming down, semi-finished going up. We'll see the fourth quarter in terms of how we can manage, I mean the working capital, in particular also is a function of how we will start, I mean, into 2022. Overall, on an underlying basis, I would continue to assume the FCF or the CFBIT conversion rate for cars to stay at 0.7 to 0.9. There are, I mean, a few structural changes already coming. So that's why you see these good numbers, and we can talk about that later in more detail.

Thank you.

And we continue with Tim Rokossa from Deutsche Bank.

Yeah. Good morning, guys. It's Tim from Deutsche Bank. I'd like to go into exactly the same ratio just - If we take the balance of the first question, please. As much as we would like you to do this, you will not just continue to selling S-Class as GLS, GLE's. At the same time, you're implementing price hikes, which you probably don't see even yet in all of your numbers because you can't process all your orders. How shall we think about ASP from here in the coming quarters? Will it be down materially? Will it be down a bit? Or is there maybe even a chance for you to keep it roughly flat with the price development that you just spoke about? And secondly, and I'm sorry, Harald, I think we're going to ask you that every quad now and what's more changes in your wording, but you do continue to pile up quite a bit of cash, you just spoke positively about the cash conversion going forward. When you do think about financial flexibility that you mentioned, which flexibility do you have in mind? And would you rule out eventually higher cash returns to shareholders outside of a regular dividend? Thank you.

Yeah. Thanks, Tim. On the first one, I think I covered it already pretty much. So I mean, the ASP, which we saw in the third quarter, maybe it's not exactly the new norm, but I don't expect to mean a material degradation. I mean moving forward, as I said, will deliver, I think, not less of this wonderful vehicles, but probably even more, but maybe some more in the contact and that, therefore, that might have an impact, I mean, on ASP, but not very severely or substantially, I would say. In terms of capital allocation, well, 23.5%, obviously is a very comfortable position to be in. We will share that a bit with Jochen, so 5 to 6 will go over there. I think very important to see that the rating agencies, I mean, honor that so that trucks moving forward can go its own way and also build up, I mean, the financing portfolio, which is a key enabler of the business. That is our first and foremost priority. That should still leave us, I would say, -- on the Mercedes side with a very comfortable cash position, net cash position by the end of 2021. Well, in terms of capital allocation, if you allow me to say, I think you're well served with the spin. If we translate also where we are to date in terms of net income, and we translate the guidance into net income full year without making promises, I cannot do as it hasn't gone through the Supervisory Board, but if we would apply a 40% payout, I think that would be a pretty decent dividend. I mean for 2021, but we'll see that at a later point. And then I think there's still, I mean, lots of time to talk about further capital allocation and priorities in the course of 2022. Let's do the spin first and then talk about it later.

Fair enough. Thank you.

And we continue with Patrick Hummel from UBS.

Yeah, thank you. Good morning, Harald, Jochen and Steffen. I have two questions as well. First, a bit more shorter term one for Jochen. The shortage in semiconductors for heavy-duty trucks in North America, the wording, you just used sounds a little bit less constructive for the near term than it does the chip supply for cars. Can you just elaborate in more detail how these chips are different to the chips you're using in passenger cars or in the European trucks? And what is causing maybe a slightly delayed recovery on that front? And my second question is really a big picture for Harald. You are pursuing a luxury strategy, a luxury EV strategy. And -- we've heard from some competitors over the past few months that go also aggressively into the software revenue pools. But for them, scale and fleet size is very important Tesla that is pushing extremely hard to grow volumes at the low end and ultimately just sell their full self-driving solutions to millions of cars, or be it General Motors at their CMD, you know everything they talked about with the 2025 or 2030 view depends on the fleet size, the economics of the software because it's a fixed cost business ultimately. So how should we square -- On the 1 hand, Mercedes-Benz luxury and exclusivity strategy with, on the other hand, the software-related opportunities that are very much a scale game. Thank you.

Patrick, thanks for your question. So first of all, to avoid misunderstanding, the semiconductor on the heavy side hits Europe side of North America. And the reason for that is that we have, in the past, quite successfully implemented commonality on engines on electric architecture as well. So it's on both sides of the Atlantic, basically. When we look on the semiconductor outlook, it's not only 1 semiconductor, it's a couple of them. And at the moment, there is improvement, but the question is how fast do we get the chips in. So that's the biggest problem for the Q4. And it's basically like being on a roller coaster. On one day, you solve 1 chip and then another day, another one comes in there, still this high volatility for the fourth quarter. And as I said, there might be also impact then for the first half of 2022 on that one. So that's the situation at the moment. It's different than on. We have very specific chips for trucks, which are not used on, so that's the independent development. But that's the situation we are in at the moment.

And Patrick, on your bigger picture question, well, on the luxury versus scale. What we consider as a very important one, in particular, when it comes to software and operating system is that you can differentiate. I mean if you, if you want to position, I mean, your products, I mean, as luxury products, I think it deserves. I mean, to be to have propriety, I mean on your operating system and key differentiating factors. This is what we're doing with MBOS in particular, it is also important to own the customer interface, and that's why we're not going to play in vanilla off the shelf by solution here. Does it mean on the other side that we're doing everything now in-house in terms of, I mean, software development, we're not doing it. But we go a bit deeper in the value chain. We control what is -- what is crucial in terms of the architecture. I do believe that will give us even an opportunity moving forward is -- I mean, each and every time you're doing a change in terms of application or you mean bring in additional features the incremental effort to do so will be less than turning back to the supply chain in each and every time and asking for the full set, I mean, one more time. So this is, I mean, the perspective, I mean, we have on that side. And again, we consider it's a key differentiating item in particular, in the luxury space, and we can then manage -- scale impact.

For collaboration with a volume manufacturer on the software side is not a priority for you?

We cooperate. I mean take the example of NVIDIA. I mean would we step in into, I mean, a chip development our sales here. No, we wouldn't. I mean they do a significant part. I mean, of the development for the ADAS features moving forward. That's part of the arrangement. So I think you can see from there that we're using the scales, I mean in software industry. But then in terms of the -- application, we want to have our hands on that.

Thank you, Harald. Thank you, Jochen.

And we continue with George Gallier from Goldman.

Good morning and thank you for taking my question. George from GS. Just coming back to on Tim's question, I think investors can increasingly sense the real emphasis on luxury at Mercedes. And obviously, pricing is key for luxury brands and a differentiating point at Ferrari. With this in mind, would you be willing to break out the pricing from Mercedes cars specifically in the bridge at Q3. And is this something you might be willing to break out in your disclosure going forward or at least some mechanism through which investors can more accurately measure your pricing ex the impact from vans and the mix effect? And then the second question I had was with respect to the truck separation and what this means for the dividend. Will the dividend from Mercedes reduced based on Mercedes on a stand-alone basis with truck management to make their own decision around dividends? Or is the dividend planned to be determined at a group level. And if it is on a stand-alone basis, maybe for, are there any reasons why Daimler Truck management might want to deviate from Daimler historic payout ratio of around 40%.

Thanks, George. So on pricing and splitting it out. Well, no, I think we cannot split out, I mean, the detailed elements of volume mix and pricing. I think that would go too far and probably will have implications and impacts you wouldn't wish to see. What I can tell you, if you take the Q3 bridge. For example, now for cars and vans, I mean, together, you see a net impact in the bridge, which is more than EUR 1 billion positive from volume structure and the volume mix and pricing. I'm sure you did the math already. You can easily see with a volume drop. I mean, you have a volume impact, which is pretty massive. So probably it is in the order of magnitude of a 4-digit number. And that mean tells you how strong the combined mix and pricing impact was in the quarter. But I think I'm now at the limit of what I can tell you. In terms of the dividend, the dividend for 2021 will be determined at the group level. We'll talk about that. I mean when we disclose, I mean, full year numbers, I mean in the beginning of 2022. I mean obviously. The truck shares, I think I can say that we'll have no dividend rights for 2021, then what you're going to do moving forward? Over to you.

Thanks, Harald. So well, it's pretty simple. I think the logic we have today at Daimler is a very solid, very good one. In the past, we on the truck side, we're always able to convert our EBIT and cash. We have more challenges on the EBIT side. Cash was not the biggest problem. So from that angle, I see no reason to change that for the moment, and we will continue with the logic we have today, and we will finally confirm that also at the Capital Market Day in November.

Great. Thank you very much.

And next gentleman in line is Horst Schneider from Bank of America.

Yes, good morning. And thanks for taking my question. Horst Schneider from Bank of America. I have got two, please, as well. The first 1 relates to cost reduction. Harald, you mentioned that you're now in terms of fixed costs, 15% below 2019. I always struggle a bit with the 2019 comparison because you achieved already a lot. So from now on, what can we expect going forward in terms of cost reduction? I mean, we still had this year some impacts from short-term work, et cetera. So on what cost measures you're working from here, what are the potential levers also for 2022 and thereafter, and have you got any exceptional plan regarding, for example, outsourcing of combustion engine activities? Then the second question relates again also to the new group structure. I know that you can focus a lot more. I just would be interested to learn if you aim to change also segment reporting, so that you split out again as discuss and Ben in the future. And maybe also you make use of the opportunity and you host a new CMD that you outline maybe more detailed targets for the new segments? Thank you.

Thanks, Horst. So first on cost evolution, in particular, fixed cost, I think that was your point. Well, I think 2019 is a fair reference that's where we decided basically to engage into a material fixed cost reduction. Yes, I mean, you're right, in 2020, we made already remain substantial progress in 2020, I mean, a significant contribution came from the short-term working due to the COVID lockdowns. Now if you look into 2021, more or less what you can see if you take really the run rate of the fixed cost, we could make the fixed cost evolution in 2021 to be at 2020 level, which means the short-term working impact benefit in 2020 is now fully compensated by underlying measures. I think that's a pretty strong progress. I mean, in 202, what are we doing moving forward? I mean we have the programs into place, as you know, and that makes it that in the indirect field, I mean, in particular, in Germany, I gave the number of 4,400. I mean that journey will continue. We have to do it for the reasons I mean you all know to cater for, I mean, the solid profitability also on the walk to the -- world. And I mean what are -- I mean other key important levers in here, certainly, attrition is an important one. The age will allow us to address over many years, I think, substantial progress without significant cost associated to it. digitalization in all of the fields. I mean, we mentioned, but also on the operational side, further leaning the industrial footprint, taking fixed cost out is an important one. You might have noticed in the intro today that we were talking about the transfer of the next-generation compact and midsized gearbox to Magna. This is another step in the powertrain transformation. And therefore, it's another step also in terms of taking fixed cost out. So working on all levers and the journey, I mean, is going to be long. I think, I mean, we understood that and I mean the colleagues understood that second question in terms of segment reporting. Now the priority is, first, I mean, to make an - the spin happen in December. And then I think we'll have opportunities to talk at the beginning of the year in which level of detail in structure. We want to report about Mercedes to give you the access -- the key to the intrinsic value of the company.

Just quickly a follow-up on this cost side. Would you commit to any cost-cutting number from now, for example, to 2025 because you always refer and you talk about 25 targets, you talk always about this 2019 comparison, but you have achieved already a lot. So from what can be reduced from now to 2025?

I think my math tell me, we said that we want to reduce fixed costs by more than 20% compared to actual some in 2019, so roughly being in there by 15%. It means there's another slice to go. Bear in mind, please, as well that you need to offset, I mean, escalation escalation, cost inflation, I think, is in everybody's minds in these days, might impact also labor, maybe not in the early part of 2022, but in 2023. If you take that multiyear, that's a significant headwind, you need to compensate by efficiency by prioritization of activities. So that's not a walk in the park. So and giving you these references to actuals, I think is probably more meaningful than giving you any cost cutting against - baselines, you don't know. I mean I could give you very impressive numbers as long as you don't know the notional baseline, it's just absolutely meaningless.

All right. That’s very helpful. Thanks, Harald.

We continue with Jose Asumendi from JPMorgan.

Thanks very much. Two questions, please, Harald. Obviously, Mercedes and production down 30% and margins close to 8% shows the resilience in the quarter. Can you comment on the next catalyst that we have for [indiscernible] you comment on transition to the online sales channels? How quickly are you evolving there? That will be clearly a margin accretive going forward. Second, can you talk about Maybach [ph] Are you still targeting to double sales there? This is a clear margin driver as well going forward? And maybe a little bit early to talk about the product cycle there, but any details you can show. And then three, on the manufacturing efficiency, do you also considering how Giga has been as an option in order to improve the manufacturing efficiency going forward? And then Jochen you've got basically the strongest book-to-bill ratio in 6 years, and you're going into the spin-off. So can you comment this a little bit around how you plan to deliver the book in the coming quarters? What are the bottlenecks, and also with rising raw materials, how are you managing this in terms of passing on price increases through that very strong order book?

I hear -- I mean we are left with two minutes, but we cannot answer all of them. I mean I'll take them in the first 1 maybe in terms of what the next catalyst. Clearly, we consider the spin to be a catalyst. Then [indiscernible] or management team can demonstrate a pure play on commercial vehicle. And we, on the Mercedes side can demonstrate the pure play on Mercedes with a focus, I mean, on luxury, on software, on. I think we can demonstrate that with a very strong product substance you see already today with products coming out as we showed in Munich during the show. -- rest assured, there's much more in the pipeline being prepared and coming over the decade throughout the decade so that we can be luxury up to 100% by the end of the decade. And at the same time, maybe just to cover mines, the second 1 on Maybach and the top end vehicle. You could see a presentation of Maybach vehicles also in Munich on electric on the basis of the EQS SUV fascinating vehicle. The Maybach on the basis of the S-Class, I mean, has a very high market attraction and appeal. I mean right now, we will definitely increase that share and will be a lever also to improve from in ASP moving forward. Now I assume almost all the time. Maybe the last one to you, Jochen.

Yes. Thanks. Yes, Well, the bottleneck is pretty simple bottleneck at the moment is really the same contractor there's a huge, huge demand, as I said. And as soon as we get the chips in, we can deliver the trucks. There's urgent demand from truck side. We had a customer event over the weekend in U.S. And was one and confirm everybody is basically asking for higher shares of the production for next year, so really a very solid demand. Bottleneck is semiconductor. The other bottleneck in the past, which was I often discussed was an engine that's not an issue. We have enough capacity to fulfill the demand on that side. And then quickly on raw material. Well, as I said, raw material took hit this year also still high spot rate. So it will be a topic also for 2022. Given the strong order book, it takes some time until price increases materialize in the financials. We will see this impact mainly in 2022, but we have a price component included for raw materials in our contract in 2022.

Ladies and gentlemen, thank you very much for your questions and for being with us today. And sorry for the short technical break. Thank you very much to Harald and Jochen for answering the questions. Now as always, IR stands at your disposal to answer further questions you might have. As a quick reminder, it has been said, November 11, the virtual Daimler Truck Capital Markets Day. We hope you will find the time to join us there. To all of you, have a great morning, great afternoon or great evening, and we look forward to talking to you soon. Thanks and goodbye.