Thierry Huon - IR Director Clotilde Delbos - CFO & EVP

Thomas Besson - Kepler Cheuvreux Dominic O'Brien - Exane BNP Paribas Gaetan Toulemonde - Deutsche Bank Charles Coldicott - Redburn Horst Schneider - HSBC Harald Hendrikse - Morgan Stanley Raghav Gupta - Citigroup

Ladies and gentlemen, welcome to Groupe Renault Third Quarter Revenue 2018 Conference Call. I now hand over to Mr. Thierry Huon. Sir, please go ahead.

Good morning, everyone, and welcome to Renault Third Quarter '18 Conference Call, broadcast live and available in replay version in our website. The presentation file and press release for this call are all available in the Finance sections of our website. I would like to point out the disclaimer on Slide 2 of this pack regarding the information contained within this document, and in particular, about forward-looking statements, and I invite all participants to read this. Today's call is scheduled to last 45 minutes. Unfortunately, we won't have two speakers today as Thierry Koskas is not able to join us for this call due to a private emergency. So Clotilde Delbos, EVP and CFO, will handle the two parts of the presentation. This will last about 15 minutes and will be followed by a Q&A session. If we don't have time to take everyone's question in this session, Thierry, Martin, Cristophe and myself will be around to take your calls later. Without further ado, I hand over to Clotilde for its - her presentation.

Thank you, Thierry, and good morning, everybody. Before reviewing our Q3 commercial results, I would like to highlight key takeaways from this quarter. It has been - it has not been an easy one as we had to deal with headwinds like WLTP, Iran, difficult emerging markets and ForEx, but we have shown strong resilience, and I confirm today our guidance for the year. WLTP, as you know, has been the hot topic in the industry for the last quarter. I think we can say that we have managed this challenge successfully. We have been in line with our plan, and we got our homologation on time for the vast majority of them. Of course, as for our peers, Q3 sales have been impacted by an unusual seasonality, which partly explains the gap between invoices and registrations. Another key point of this Q3 has been the strong headwinds from the ForEx. As you probably remember, we were not expecting such an adverse currency environment at the end of H1. Summertimes has been even tougher on this side, but we have been quick and determined to compensate as much as possible this negative through price increases. Unfortunately, these falls of some currency triggered a collapse of key markets for us, like Argentina, down almost 25% in the quarter; and Turkey, which declined by more than 50%. This came on top of the stop of our CKD business with Iran. Looking into Q4, visibility for the European market is not great as the aftermaths of WLTP may still impact the business. This creates uncertainties regarding the level of demand for the rest of the year. On the other hand, while the situation in some emerging markets is not easy, we are still seeing further positive development for two of our largest markets, namely Russia and Brazil, which are offering us great opportunities. In this context, we are pleased to see that AVTOVAZ confirmed yesterday that it is on solid recovery path. I will now turn to the commercial performance of the last quarter. I will first comment the TIV's evolution for Q3. Overall, the worldwide TIV lowered by 2.4 points in Q3 versus Q3 2017 with discrepancies between regions. In Europe, TIV grew by 0.8%, with especially strong momentum in France and Spain. U.K. and Italy were down. Outside Europe, some markets remained well oriented. It is the case for Russia and Brazil. On the other hand, some markets are facing a tough situation, mainly Turkey and Argentina, and the Iran market is now closed. Finally, we observed a slowdown in the Chinese and Korean market. Let's now move to our sales figures. In Q3, group sales were up 2.9%, including the addition of Jinbei sales. At the same parameter as in Q3 2017, sales are down 1.7%. Let's have a look at the detail per region. In Europe, the group outpaces the market with a strong progression of 8.6%, thanks to satisfactory management of regulation transition in August and September. In Eurasia, sales are down 5.6% in a market that is down 8.3%. This is a result of sales increase in Russia that does not fully compensate the drop in the Turkish market. In AMI, sales are down 24.4%. As you well know, sales have stopped from the time being in Iran, and our sales in India dropped by 34% before the arrival of new products next year. In Americas, sales are stable. This is the result of a good performance in Brazil that compensates the drop of the Argentinian market. Finally, in Asia Pacific, sales are up 72%, including Jinbei, down 14.8% on 2017 parameter. Sales are down in China before extension of the lineup next year. On the other hand, momentum is better in Korea, where performance is now better than the market. Let's have a look at the balance per region and country ranking next slide. Due to a drop of significant markets outside Europe and strong Q3 in Europe, the weight of Europe in group sales is up 2 points versus Q3 last year. In terms of countries ranking, 7 out of the 10 countries are progressing or stable in performance versus Q3 last year. Let's move to the next slide. Obviously, considering evolution of our sales, we can see the weight of Asia increasing with the addition of Jinbei sales. Other region outside Europe are down in terms of weight in our sales. Let's finish this presentation with the result of our latest model. Duster is a huge success and is the #1 SUV sold in Europe in retail market. Kwid also confirms the promising results we had seen in H1, being number two of its segment in Brazil. In EV, the group is leading the European market, neck to neck with Nissan, in spite of lower supply than expected for some components. And finally, Alpine is a great commercial success with more than 5,000 cars blocked - booked, sorry, booked in Europe and a promising launch in Asia. Waiting time is now one year. Let's now move to the financial part. I will start this part of the presentation with the change in third quarter revenues compared to last year on Slide 12. Please note that our accounts have not yet been adjusted for hyperinflation in Argentina as we will have to apply IAS 29 for our 20 - for our full year results. As you can see, group revenues decreased 6% to €11.5 billion in the quarter. At constant exchange rates, the decrease would have been 1.4%. The contribution from the Automotive division, excluding AVTOVAZ, decreased 8.4% to €10 billion. This change takes into account the accounting change of the interest rate subsidies, which has reduced the revenues of the division in the quarter by €142 million or 1.3 points and a ForEx impact of 4 points. Excluding these effects, Auto revenues would have been down 3.1%. AVTOVAZ contribution was down 1.1% at €627 million in the quarter because of the ForEx. Before this impact, it would have been up 11.4%. The contribution from sales financing was up 31.1% at €800 million, including the positive effect coming from the accounting change mentioned above. I will begin the analysis with a review of the Automotive division on Slide 13. From the left-hand side, the first item, volume, accounted for minus 2.6 points despite the increase shown in registration. This gap comes from the fact that CKDs, notably in Iran, registration in China, Lada, Jinbei and Huasong cars are not captured in the volume effect. In addition, the change in inventories had a negative effect slightly higher than 3 points on this item. And finally, let's not forget that our new car business is not 100% of Automotive revenues. Next item. Geographic mix had a positive impact of 0.7 points reflecting the greater proportion of our business in Europe during this quarter, where the average selling price is higher than for the rest of the group. The product mix effect was slightly positive in Q3 at 0.2 points, thanks to the good performance of Clio, Kaptur with a K, and ZOE. The price effect was positive by 1.6 points, showing an acceleration compared to the 1.2 points recorded in H1. This came from the price increases implemented in emerging markets, but also from our efforts to price the additional content put in our cars in Europe. The sales to partners item was negative 3.3 points in the quarter, reflecting the stop of our business in Iran and lower demand from our partners for diesel engines and assembled cars. I also remind you that Q3 last year was pretty strong with a plus 4.8 points registered in Q3 '17. The next item in foreign exchange - is foreign exchange. It showed a negative impact of 4 points. While we are expecting a negative effect, as discussed at the end of H1, this is more negative than our initial expectation. As I mentioned in my preliminary remarks, we saw the collapse of some currencies during the summer. With no surprise, the stronger contributors to this negative trend have been the Argentinian peso, the Brazilian real and the Turkish lira. The last item, others, impacted negatively for 1 point despite the good performance of the spare part business. This is mainly explained by the impact of buyback retreatment and the accounting change for interest rates subsidies. If I now turn to Slide 14, you have our inventory situation. Globally, our stock went down in the quarter to 588,000 cars at the end of September, when we were at 660,000 at the end of June '18 and at 609,000 a year ago. In number of days of sales, we saw a decline from 71 days to 68 days. As usual, for third quarter, we have a destocking at independent dealers. Independent dealers' stock stood at 302,000 units versus 424,000 units at the end of June. At the same time, group inventory increased by 50,000 units in the quarter. I will now move on to Slide 15 and comment RCI commercial performance. In terms of activity during the quarter, the number of new contracts written by RCI Banque decreased by 2.5% versus the same period in '17, reflecting the collapse of the car demand in some emerging markets. New financing stayed relatively stable at €5 billion or 0.1% decrease. Before moving on to the Q&A session, I will turn to the last slide, #16, which gives you our outlook for 2018. We have adjusted our market forecast for the full year. We now expect the world market to grow 2% versus plus 3% previously. The European market is now expected to grow more than 1.5% versus plus 1.5%, with French market at more than plus 4% versus plus 2% previously. China market is now expected at plus 2% versus plus 5% previously. We have kept unchanged our assumption for Russia, more than plus 10%; Brazil, plus 10%; and India, plus 8%. In this context, as I mentioned in my preliminary remarks, we confirm our financial guidance for the full year 2018, which states increased group revenue at constant exchange rates and parameter, maintain group operating margin above 6% before IFRS 15, generate a positive automotive operational free cash flow. This conclude my presentation. I will now take your question, and so I will hand over the call to the conference operator. Thank you for your attention.

[Operator Instructions]. First question, from Mr. Thomas Besson from Kepler Cheveraux.

I have two questions, please. First, on emerging markets. Could you confirm whether the new context for emerging markets still allows you to have a higher share of emerging markets in your earnings, as planned in October '16? And second question, can you comment on the European pricing environment? You mentioned relatively low visibility on volumes. Some premium automakers have mentioned tough pricing environment. Is that the case or are we still in a situation where most automakers try to pass on rising costs to the final customers?

Thomas, thank you for your question. Just to make sure I answer your first question, you're asking whether the new context in emerging market will allow us, in the future, i.e., by the end of the plan, to have more earnings in emerging market than what we have at the beginning of the plan? Is that the sense of your question?

No. The question was for 2018...

I don't think we ever said that we would have more earnings in emerging markets in 2018 than in European market, so I'm a little [indiscernible] question.

No, no. Progressive increase, Clotilde.

Sorry, progressive increase.

In 2016, you are below 25, and you're aiming to balance up. And my question is whether the contribution of emerging market is progressing in 2018 or whether it - it can't progress because of the volumes and FX.

Well, I think, first, if I may, this is not an earning call, so I'm not going to comment on earnings, and it's too early to say what the full year is going to be. But clearly, I mean, the situation in the American market is hurting pretty badly, as you can see on the turnover. The main market which are impacted, which are Iran, Turkey and Argentina, just for your memory, did represent last year, in 2017, full year, 11% of our total volume. So the market that are being in difficult situation for Q3 are not negligible market for us. So clearly, it will have an impact on our earnings. That being said, two other markets, which are extremely important for us, which is Russia, which is our second market; and Brazil, which is our fourth market, are, on the contrary, on a very good path. They're progressing faster than what we had anticipating at the beginning of the year. So we have a very mixed situation with, clearly, markets which are not in a situation that we did not forecast for sure at the beginning of the year and other market, among the biggest important one, which are again Russia and Brazil, which are doing a lot better. Now to your second question, which is the European pricing environment. Same here, there is mixed situation. We do not see too much price tension in most of Europe. There are two countries in which we do see price tension, and they are clearly identified. These two countries are, namely, Italy and Germany. For the rest, clearly, we don't see any specific bad movement or bad behaviors on the rest of the markets.

Next question, from Mr. Dominic O'Brien from Exane. Dominic O'Brien: My first one is another question on Europe. Can you just walk us through why you had such a significant inventory destocking in the third quarter? And should we expect that to sort of rebound in Q4 as you restock the dealer chain or is visibility going to be too low? And just following on from that, did you cut production significantly in Q3? And how should we think about that in Q4? My other question is just on the 2022 midterm plan. On the top line target, is this plan still applicable given how 2018 is shaping up? I just mentioned that given the loss of Iran and more tricky situation we're now seeing in the Americas, Eurasia and APAC, is that target of 40% volume growth still applicable now?

Thank you, Dominic, for your questions. Okay. Yes, indeed, there has been a significant inventory destocking in Q3. I think this is clearly linked to the awkward situation of the European market in the months of July to September, but especially in August and in September. To be honest, we did not foresee such a big impact of WLTP on the profile of the sales in the third quarter. And we were actually very happy to see that, in August, the most active market were the non-tactical market, I would say, as we have seen a surge in our retail sales in August. I guess, the customers, while reading on the newspaper that it was going to be a mess, that the taxation situation was completely unclear for them and for fleet owners after the introduction of WLTP, many customers decided to buy their car, private customers decided to buy their car already in August. And same for fleets, as they were not very clear on the taxation impact from the various government in the various countries, there was a lot of sales in the month of August. And hence, that's the drop that you have seen in September in the market in our destocking because once you have sold the cars, it takes a little time to restock after such a significant numbers of sales. So will we restock in terms of Q4? It's a good question. We are watching very carefully what is the market situation. You've seen in my preliminary remarks that there are still low visibility on the demand in Europe following the strange movement of August and September. So for the moment, we will be very careful not to replenish too much the stock in order not to finish the year with heavy inventory. In terms of production, we have had the usual production break in terms of Q3. As you know, that's as usual. As we were extremely cautious also in terms of visibility, we have extended for 1 or 2 days here or there the closing period of the plant in Europe, except maybe one plant for which we had maintenance plan, and that's the reason why we closed the plant a little longer than expected. So that's, indeed, one of the reason why production, obviously, was slightly lower in Q3 than usual. In terms of Q4, we expect the usual seasonality rebound, where we have as always a very strong reincrease in production in the fourth quarter versus the third quarter. That being said, in the countries where the market, so external from Europe, where the market is heavily impacted, we obviously are adjusting our production capacity. I have in mind, notably, Argentina. Obviously, when the market is down at that level, we are taking the necessary measure in order to adjust our production base. But for the rest, it should be relatively in line with the usual Q4 rebound. On the contrary, for Turkey, as Turkey is a big exporting base, we are looking at every opportunity we can find to leverage the good cost position for Turkey in view of the current Turkish lira situation. You know that Turkey is producing, notably, Clio. And you know that Clio is one of our bestseller, so we are taking all opportunities to continue to benefit from extra volume on Clio. And we are looking at how we can sell the Mégane sedan, which is the other product which is being produced in Brussels, but notably, so far, mostly sold in Turkey. We are seeing what other markets could welcome such a car, which is, by the way, a beautiful car, and that we could sell in other places in order to benefit from the low-cost base of Turkey. For your second question, you're talking about 2022. Clearly, in our view, it is very too early to say that we have any concern on our guides and commitment for the 2022 elements and guidance that we did give. Clearly, Iran is a topic. But nevertheless, it might reopen by 2022. We never know. And in the meantime, we are trying to see how we can refocus our attention, I would say, on other markets. I think Thierry Bolloré mentioned Africa in the July call, and that's clearly what we are working on, especially South Africa, which we believe is a big potential for us. And for the rest of Africa and the Gulf countries, you have to know, I don't know if you know, but Renault, globally, is the first brand in Africa, thanks to our strong position in North Africa and a good position in South Africa. And we are trying to leverage these good brand image in those countries to develop our sales in the rest of Africa. So that's how we try to compensate Iran. And for the other countries, sincerely, I have - I don't think we can plan that. Turkey and Argentina will still be in the same position in the four year times. Those countries are quite volatile, and we clearly think that they will have rebounded by that time. So clearly, we confirm also the 2022 guidelines that we have given previously.

Next question, from Mr. Gaetan Toulemonde from Deutsche Bank.

I have two questions, too. The first one is a simple one. I remember in H1 conference call you mentioned that on the FX currency movement in H1, you have been able to mostly offset 50% of it through price increase. So my question is can we - can you accelerate that in Q3 or do we keep roughly the same impact? That's my first question.

Thank you, Gaetan. I think we said that we would do specific efforts in terms to price, the currency effect in the countries which are impacted. And indeed, we did so. I think we have increased by 10 to 15 points our ability to price FX negative movement and the squeeze we have in those countries in the third quarter. Obviously, there are countries which are easier than others. It's true that when, at the same time, the market is down, it's less easy, I must say, to pass on price increases. We've been very active in Russia, in South America and Brazil. But also in Argentina and in Turkey, despite the market movement, we've been able to increase the average of price increases.

Okay. That's very clear. My second question is on Europe. You mentioned, I think, on Page 2 or 3, that no visibility in Q4. You have been the best performing in Q3 in Europe in terms of performance. And I'm a little bit afraid that you might lose part of it in Q4. So can you assure me a little bit? Can you give us a little bit an idea of order intake, order book? Where do we stand to hope that a big part of this good performance in Q3 will not be lost in Q4 for you guys?

Well, it's still early, Gaetan. I would love to give you more clarity if we had more clarity. I think the first weeks of October are not exactly completely rebounding yet. I'm talking about the market, obviously. So it's really too early to say. We'll see. Yes, we've been quite good performer in Q3, and we're very happy for that. Q4 is still to be seen. It's clearly too early to say at this stage.

But your order book, is it good today? Or it's - how long can you - quite actively speaking?

Yes, sure. Order book is at the correct level. Let's put it that way. Obviously, when we have such a destocking impact, you need some time to replenish the order book, that's normal. So just looking at the order book as of today is not giving an answer, clear answer, to your question, but we are confident that Q4 is going to be - well, Q4 is still going to be complicated because of WLTP. So let's see what it's going to be. We're not in a dramatic position, that's for sure.

Next question, from Mr. Charles Coldicott from Redburn.

I just have two, please. The first is on the China TIV forecast that you've changed for 2018. Given the very negative trend we've seen in the last few months, can you just comment a little bit more on that whether or not you think that will continue or for how long and maybe if you could give, possibly, even an early indication about what you would expect in 2019? My second question is on the diesel trade-in schemes that we've had, firstly, in Germany and, in the last week, have been rumored to be introduced in France. What, for Renault, do you anticipate the financial cost of those diesel trade-ins news will be?

Okay, thank you. China. It's true that the China situation start to be a little concerning. For those who are big in China, which is not our case. You know that we're not selling many cars in China, so the impact is seen in our results, but it's not major as it can be for other OEM. But true, the China market has been down in Q3. So that's the reason why we have decreased our forecast for the full year. I think the trade war is putting some tension on the China market. The underlying levers for growth in China, which are automotive, real estate and constructions, are all giving signs of slowdown. And I think that's what is also impacting globally. The global context is what has impacted the auto market. So we're not that confident in - on China for the time being. Obviously, 2019 can be different. But Q4, we prefer to be on the cautious side. But again, this is not a huge impact for Renault. You know that last year we sold 70,000 cars, this year will be slightly less because of this drop and some network and commercial inefficiency that we had in the past in China that we're tackling. We are changing the - some of the organization and people that we have on the China sales organization as we speak, so we're confident that our own performance will rebound in the coming months, but the market itself is really showing, Q3 for sure and probably Q4 also, some slowdown. On the diesel trade-in scheme, I think it is too early to assess the exact impact on Renault. There are, indeed, some rumors on France, but it's too early to say what is going to be the outcome of the potential discussion that are taking place. And on Germany, it's not such a big market for us versus others, so there will be a potential impact, but that should not be major.

Next question, from Horst Schneider from HSBC.

It's Horst here, from HSBC. I - first, I want to know what are the - what is now the trend for some parameters in the sales growth. So maybe you can give us some more guidance what we should think about sales to partners in Q4, the price trend and also the FX trend. I know difficult questions, but at least, maybe if the run rate, for example, I think, and pricing, if they get more positive, I would guess that sales to partners, the trend remains unchanged in terms of growth rate. And currency, I would also expect it to remain the same, roughly, in Q4. So maybe you can confirm that or specify that a little bit more. And then I would be also interested in getting to know what is the inventories in terms of days of sales on a forward-looking basis, not backward-looking basis. Yes.

Okay, thanks. Just - sorry, what I wanted to add on the previous question on the trading scheme in Germany, we need to be careful on the announcement that you hear because most of the time these trading scheme replace others. So it's not necessarily when you hear a few hundred - a few thousand cars to replace your old car, usually, it does replace most of the discount which was given previously. So we have to be a little careful on the amounts which are being disclosed in the media. Now, Horst, on your questions. The first one, which is sales to partner. Well, on Q4, basically, you know what is in the sales to partner, right? You have the sales to Iran and China. You have the CKDs to Iran and China. You have cars that we produced for our partners, mostly Nissan and Daimler, and you have the diesel engine sales. Well, none - unfortunately, none of these levers are in the right direction. Iran in Q3, we still had a portion, as we sold kits up until August 6, but we won't sell any kit in the fourth quarter. And China, as just mentioned in the previous question, we see the TIV going down and being difficult in the fourth quarter. On the diesel engines, you look like we do have the trend of diesel on the market. So here, same thing, there is no hope for rebound in the fourth quarter. And on Nissan and other partners' sales, the comps were high in Q4 2017, so there is also not much likelihood for an increase in the fourth quarter. So, unfortunately, I think the trend for sales to partner in the fourth quarter is not going to improve, on the contrary, is going to be even more negative, in my view. On FX, difficult to say. I don't have a crystal ball, unfortunately. If I remember well, at the same call at the end of July, I was saying that, "Well, FX was starting to stabilize." And you saw what happened during summer, with a huge drop in devaluation, depreciation of the Turkish lira, of the Argentinean peso, and to a lesser extent, Brazil and ruble. So same thing today. We see some type of stabilization as we speak today. But what is it going to be at the end of the months - for the months of November and December, it's very difficult to say. Even though, again, we have seen some amelioration, I would say, for example, on the ruble and on the real in the last weeks, but too early to say. In terms of pricing. Clearly, we're going to continue our effort to offset whatever headwinds we have on the emerging markets, that's the first point. On the second point, I think we have been pretty good in the quarter, in the third quarter in order to try to price the extra content that we have on the cars due to Euro 6d-TEMP, which are being put on the road at the same time of WLTP. We've been pretty good in the last weeks. Let's put it that way. Let's - too early to say if this will be able to continue. But clearly, we're fighting to be in the right momentum in terms of pricing, trying to stay in the right channel in terms of distribution not to have a negative impact on these elements. And I'm quite confident that we will continue to have a good impact on the pricing going forward. On the inventory going forward, again, as we have low visibility on the sales in Europe in the fourth quarter, I think it is not very relevant to provide information on the inventory ratio, forward-looking, as it is very demanding - very much depending on our numbers of sales, which, again, is with low visibility at this stage.

Just an add-on then on FX. If everything stays as it is right now, what will be then the impact going forward?

Well, if it stays the same, it should be roughly the same impact. Yes, we did have a deterioration of the FX at the end of Q4 last year, so maybe a slight positive, but clearly very much too early to say. When I said a slight positive, it's versus Q3 impact, not versus net-net. Just to be clear. Just wanted to be clear. I don't expect a positive box on FX unfortunately. I would love so.

Next question, from Mr. Harald Hendrikse from Morgan Stanley.

Just on Europe again. Two things, really. Firstly, it's pretty clear that everybody is going to be impacted by a lack of deliveries or certainly those people impacted by WLTP. And so the movement in dealer inventories, obviously, hit you by, well, 32,000 units or maybe €400 million, €500 million, which is roughly where you are, below consensus. But how confident, a, are you that you can get all those deliveries back in the fourth quarter? Because it seems like quite a big ask, that it seems like the whole industry is going to have a very tough fourth quarter to deliver all the cars that were not delivered in Q3. And then, secondly, given that we can't really see what the underlying trends have been in the market in Europe, the key markets in Europe in the last 3 or 4 months because of the inventory movement, can you give us some idea of what you think is actually happening to the key markets in Europe in terms of underlying demand trends? It almost feels like the European markets have actually got a little bit tougher, having been quite resilient in the first half.

Okay. Thank you for your question. Well, the delivery in Q4, obviously, will depend on the demand, what is probably the attitude of the customers, not necessarily the - our ability to provide. I mean, I don't - we don't have any question on that. The question is what is going to be the demand. So your question is very good in terms of underlying trend because this is going to be the key. What has been sold in August, obviously, will impact - there will be lower demand by nature because once a customer has bought a car, he is not going to buy another one in September or October. So there will be some impact of, I would say, the aftermath of the August sales. But the real question, you're perfectly right, is the underlying trend and the will of customer also to buy at the new prices, which have been raised in order to face the extra content. So to answer your question on the underlying trend, I think we have various situation depending on countries in Europe. Clearly, for me, the underlying market in U.K. is not good. It has not been - it has been the case in the last quarters. I don't see any reason for that to change in the coming quarters. Same with Italy. I think the underlying market in Italy is not in the right solution. There has been a surge in tactical in the last quarters, so this is usually the sign, independently for whatever happens on WLTP, that the market - the underlying market is not good. For the rest, I'm not that concerned. Obviously, Q4 is still going to be impacted by WLTP, but I do not see any major concern on the underlying health, let's put it that way, of other countries like France, like Germany and Spain. I was in Spain last week, and they don't have that much concern about the underlying health of the markets. When you look at the global economies, when you look at the global age of the car park and when you look at all the incentives, I would say, that governments are putting on the market in order to get rid of all diesel, et cetera, et cetera. So I don't have that much concern. Let's look at more - maybe not Q4, but for the rest of the - for the coming quarters in terms of underlying health of other market, except U.K. and Italy.

And now, last question, from Mr. Raghav Gupta from Citigroup.

Two questions, firstly, in terms of the price component. You've spoken about this a little bit. You saw a sequential improvement versus Q2, which I understand is going to - an improvement in your ability to offset FX. Can you talk a little bit about any discounting you had to do in the quarter to clear old stock in Europe, particularly those vehicles that were not WLTP-compliant?

I think I touched a little on that. Yes, indeed, you're right. We've done, as mentioned, a lot of effort to price and offset FX in emerging countries. But also, as I mentioned, we're trying to price as much and be very careful on the price all extra component that we had to put in the cars due to Euro 6d and regulation in Europe. As I mentioned, the countries which are the more difficult, I think, in terms of discounting are Italy, again, that is linked to the underlying market, which is not good, and Germany. As I think was mentioned actually by some premium OEM, it is true that we see that in Germany it is more difficult than in other countries. For the rest, it has been more, I would say, normal business, linked to the aging life cycle of our cars. Nothing specific to mention. We haven't seen any price war developing in the other countries.

So there wasn't kind of additional pricing pressure or discounts that you had to provide on old stock that wasn't - that is not WLTP-compliant? I guess, that was the crux of my question and [indiscernible] anything special.

Well, obviously, there is always a risk when you have a high stock that dealers are trying to get rid of them with discount. But we looked into what we have in our stocks. Again, we destocked a lot already, so there is not that much which is still to be sold. And clearly, the teams are confident that, in a few weeks or months, this will be over without much backlog.

Okay, very well. Second one on the finco when I look at Slide 15, the volume of contracts were down - new contracts were down about 2.5%, although the absolute level of new financing was essentially unchanged. Just wondering if you could help with the dynamic here in terms of what's going on. Is it richer country mix, product mix, higher option take rates, which is kind of resulting in that delta?

Thank you for your question. Yes, indeed. The reduction in the volumes of new vehicle financing is clearly linked to the decrease in the markets, which have been impacted by the market slowdown, i.e. namely, Turkey and Argentina, clearly. Now you don't see the impact on the amount of financing for many reasons. First, usually, these countries have a lower unit, I would say, base than you have in Europe, so it's kind of a mixed geographical mix impact, first point. And also, as you know, in the financing, we not only have new vehicle financing, we also have used car financing, especially in Europe, and this is going pretty well. We also have service financing, and this is going extremely well also. So that's the reason why we've been able to offset in amount the decrease that you see in volume. Okay. Is there any more questions on the call?

We don't have any more questions for the moment. Back to you for the conclusion.

Okay. Thank you. So a very short word of conclusion. Obviously, I think we have had a lot of headwinds during the quarter. And I think that despite these headwinds, we have shown our resilience in terms of being able to try to offset the FX, to try to offset one country by the other, when we have a decrease in volume in one country trying to offset by another and facing WLTP quite successfully. So again, quite resilient results, in our view, for the quarter. Thank you for attention. Bye.

Thank you for being...

Ladies and gentlemen, this concludes today's conference call. Thank you all for your participation. You may now disconnect.