Ladies and gentlemen, welcome to Groupe Renault Third Quarter Revenue 2019 Conference Call. I now hand over to Mr. Thierry Huon. Sir, please go ahead.

Welcome to Renault third quarter 2019 conference call broadcast live and available in replay versions on our website. The presentation slide and press release for this call are all available on our Finance sections on 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 invite all participants to read this. Today's call is scheduled to last about 45 minutes. As usual, we have two speakers this morning Clotilde Delbos, acting CEO and CFO; and Olivier Murguet, acting Deputy Managing Director and Head of Sales and Regions. The presentation will last about 15 minutes and will be followed by the Q&A session. If we don't have the time to take everyone's question in this session the IR team will be around to take your calls later. I will pass the call over to Clotilde for a few opening remarks.

Thank you, Thierry and good morning everybody. Before reviewing our Q3 commercial results with Olivier, I just wanted to come back a minute on the reasons for the guidance adjustment announced last week. While we had a rebound in our sales in September our invoices for Q3 and what we have in visibility for Q4 are below our initial expectations. This is the result of a combination of several impacts, some markets weaker than expected, delayed launches and sales to partner more impacted than planned by decreasing demand for assembled vehicles, diesel engines and CKDs. On the cost side, we still had growing R&D cost. I told you when presenting, our H1 results that we needed to curb this spending. We achieved some results, but not as much as hoped as it is challenging to reduce already launched developments. Lastly, some costs related to EURO 6d and new EVAP have been a bit higher than anticipated, and not fully priced to customers. We are currently working intensively to reverse these trends, but unfortunately there is no quick fix and hence our guidance adjustment for 2019. We are convinced that going forward our product renewal plan and the stricter pricing policies and our efforts on cost will pay off and put us back on the right trajectory. Basically, this is what I wanted to share with you this morning as preliminary remarks and it is time now to come back to our Q3 revenues. I will now pass over the call to Olivier, who will review our commercial performance in the third quarter.

Good morning. I will first comment on the global market evolution for Q3. The worldwide market decreased 3.2%, with all regions showing a negative development except Europe. As you can see in the highlights by region in Europe, Germany and Italy showed strong increase compared to last year, but staying fairly strongly by almost 10% as we have seen in the retail channel in the last months. Regarding the Americas, Brazil is up plus 5% and Argentina continues on a negative trend at minus 30%. In Eurasia, Russia decreased by 1.2% and the Turkish market fell almost 22%. In India, the market has strongly and suddenly decreased to minus 27%. In this context, Group Renault sales were down 4.4%. The global market share stayed around 4% with 852,000 vehicles sold. It is worth noting that the closure of the Iranian market following the American sanction from August 2018 had an impact of minus 2.6 points. In Europe, our sales declined minus 3.4% in a market up 2.4%. We have sold 15,000 units less than last year, when we have had a punctual seasonality momentum linked to WLTP disruptions. In regions, outside Europe, Groupe Renault over performed the market with volume down 5.4% in a market that declined 6.2%. The group suffered from the decline in Turkish market Argentina and of course from the stoppage of sales in Iran, close to 24,000 units sold in Q3 2018. In Russia, our second largest country in terms of sales, the group over-performed the market, gaining two points of market share thanks to the launch of ARKANA and the continuing success of Lada products. In India, we increased our market share by 0.5 point thanks to the launch of Triber our new compact vehicle with unrivaled flexibility for transporting up to seven people in a sub-4 meter vehicle. Nevertheless in a market that fell 27% we reduced our volume by almost 8%. In Brazil, the group overperformed the market recovery with sales up 5.6% thanks to the success of Kwid and Kwid Outsider. In our China region, our sales decreased 15.5% in a market down 5%. We launched our new affordable urban electric car named K-ZE as well as New Captur in the fourth quarter. Let's go to models. Clio remains number one of this segment and second overall in Europe sales. The Clio V after being launched in France, Belgium and Luxembourg came to the market at the end of September all over Europe. In France, Clio IV plus Clio V performed better in Q3 than Clio IV last year. It is important to notice that for Clio V, we have started a strong policy of net pricing improvement. On the EV side, ZOE sales in Europe were up plus 46%; on LCV increasing in Europe by 10% in Q3 and cumulated September improving market share by 0.6 points. And in Russia regarding Lada, Granta it says number one in the market and Kwid in Brazil improved by 44% in volume. Regarding cumulative sales in September, the group's market share remains stable at 4.3% with volume reduced by 6% on a market that fell by 6.1%. In Europe, our sales were down 1% with the market notwithstanding our net price increase. In 2019, the global automotive market is expected to decline by around 4% compared to last year versus 3% as previously anticipated. The European market is expected to be between 0% and minus 1% versus stable previously. The Russian market should be down by around minus 3% versus minus 2% previously and the Brazil market should grow by around 7% versus around 8% previously. This finishes my review and I now give the floor to Clotilde.

Thank you, Olivier. So I will start this part of the presentation with the change in third quarter revenues compared to last year on slide 11. As you can see, group revenues decreased 1.6% to €11.3 billion in the quarter. At exchange -- at constant exchange rates, the decrease would have been 1.4%. The contribution from the Automotive division excluding AVTOVAZ decreased by 3.9% to €9.7 billion. Excluding the ForEx impact, auto revenues would have been down 3.2%. AVTOVAZ contribution was up 26.2% at €0.8 billion in the quarter reflecting the success of Lada product and an improved pricing. Please note that the lower elimination and the positive ForEx impact also helped. Excluding this ForEx impact, it would have been up 16.7%. The contribution from sales financing was up 5.4% at €0.8 billion. I will begin the analysis with the review of the Automotive division. The first item volume accounted for minus 0.8 points. The decrease shown in the registration was minus 4.4%. The gap came from the fact that CKDs notably in Iran registration in China, Lada, Jinbei and Huasong cars are not captured in this bucket. The change in inventory had a positive effect of about 0.6 points in this item. And finally as you know, let's not forget that our new car business is not 100% of the Automotive revenues. Geographic mix is almost neutral. The product mix effect was slightly negative in Q3 at minus 0.3 points. This stems notably from the success of Kwid in America and lower sales of Scenic in Europe. In addition, sales of Master have been affected by a fire in the plant during the summer. The price effect was positive by 2.1 points showing an acceleration compared to the one point recording in H1. This came from usual price increases implemented in Argentina to compensate the devaluation, but also from our determined pricing policy notably in Europe starting with our New Clio. The sales to partner item was negative 5.5 points in the quarter. This is the big negative impact of the quarter. It reflects the fall in our partners' demand for assembled vehicles, the continuing lower demand for diesel engines and the stoppage of our business in Iran. The next item is foreign exchange. It showed a negative impact of 0.7 points. With no surprise, the strongest negative contributor is again the Argentinian peso. The Russian ruble, the Brazilian real and the Turkish lira impacted positively the turnover this quarter. The last item others impacted positively for 1.2 points. This is mainly explained by the impact of the retreatment of buybacks and our own dealer business. Globally our stock went down in the quarter to 603,000 cars at the end of September, when we were at 630,000 cars at the end of June 2019 and at 588,000 a year ago. I remind you that we ended last year's Q3 with a low level of inventories due to WLTP introduction. Consequently, a number of days of backward sales, we have an increase over 2018 from 69 days to 75 days. This is a normal level for Q3 and it is in line with where we stood in 2017 adjusted for Iran. As usual, for third quarter, we have a destocking at independent dealers. Their stocks stood at 313,000 units versus 412,000 units at the end of June, which is in line with our usual level of stock at the end of Q3. We expect to finish the year with a normal level of stock with less than 70 days of backward sales. Let's look at RCI. In terms of activity during the quarter, the number of new contracts underwritten by RCI Banque decreased by 0.8% versus the same period in 2018, reflecting the collapse of car demand in Argentina and in Turkey. New financing stays almost stable at €5 billion or 0.2% decrease. Before moving to the Q&A session, I will turn to the last slide, which gives you our outlook for 2019. In terms of market development, Olivier has already shared with you our revised expectation. I will not come back on our financial guidance that we have revised last week. This concludes our presentation. Olivier and I will now take your questions. So I will hand over the call to the conference operator. Thank you for your attention.

Thank you. [Operator Instructions] First question from Tom Besson from Kepler Cheuvreux. Sir, please go ahead. Q – Tom Besson: Thank you very much. It's Tom Besson from Kepler Cheuvreux. I have two questions, please. One on Clio and the new pricing policy. Can you detail, please, what happened on the Clio launch? You've mentioned that some Russians have been challenging to deliver. And can you explain a bit more in detail what you mean by stronger pricing policy? That would be my first question. And the second, well, I'll ask you later.

On Clio V, I'm not sure I got the second question. But on the Clio V, yes, you saw that we launched before summer mostly France, Benelux and Luxembourg, but not the other countries. So that's the first point. In terms of countries, we only launched in a few countries, whereas we have planned at the beginning of the year or even last year to launch most of the country before the summer. Same on the version, we don't have the higher version yet. We didn't have before summer the higher version yet and we only had, I would say, the middle range version. So that's what I meant in terms of delay in launches. We had planned for more to be before summer, whereas most of it is coming now at the end of September. So that's what I meant in terms of delay in launches. It's just a few months, but in view of the impact of Clio, it's important for us. And I will turn over to Olivier on the pricing policy for Clio and more globally for the rest of the world. And if it is not completely answering your question, please tell us at the end.

Yes. On pricing policy, it's true that for a couple of months we are implementing a strict discipline of price definition within the group. Clio is a very good example. And today new Clio is priced at the same level as its main competitors, which is not the case -- which was not the case before. And this is also valid for all the new launches that are being done in the group. As a result, for example, in Europe, the net pricing on Q3 was 2.8%. So we see concretely -- on a concrete manner the first result of this policy. Q – Tom Besson: Okay. Very, very clear. You didn't miss my question yet, Clotilde, because I didn't ask it yet for the second. So I'll give it a try. On your dividend, historically, the policy has been to at least redistribute the dividend received in year -- and in the year and plus one, and eventually add a top-up. Should we consider that this will still be applied despite the possibility of cash burn in 2019? Or could you eventually change that definition in 2020 for 2019?

Tom, as I said last week obviously in view of the current context, it's really too early to confirm that we will keep the same policy. We will review exactly where we stand in terms of results and cash generation at the end of the year and then we'll convene with the Board in order to decide what is the appropriate dividend policy for the future.

Thank you, Clotilde.

Thank you. Next question from José Asumendi from JPMorgan. Please go ahead. José Asumendi: Good morning, Clotilde. Two questions, please. José Asumendi, JPMorgan. First one with the most recent changes, we're seeing across the company can you just give us a brief overview of who is doing what on Renault in terms of production and sales? Who is running around this Alliance? And are you planning to do any additional changes going forward? And I think second question would be, as we think about the margin contraction in the auto business maybe for the last 1.5 years or 2 years. What are the biggest buckets you can tackle in terms of pricing, worker layoffs or improving the capacity utilization? And when should we expect this new plan to be announced? Thank you.

Okay. Well, clearly who is doing what in the company that's an easy one. Actually we have an Executive Committee, which hasn't changed with very clear defined responsibility, working pretty well collectively. And so this hasn't changed. We have not announced any change at the level of the Executive Committee. I have asked Olivier Murguet and José-Vicente de los Mozos, our two deputy to help me on some areas of the company which are quite natural in view of their background and of their experience. For example, Olivier is going to be more -- not only involved in sales and marketing but – sorry, in sales and region, but he is also going to be more involved in marketing than what he was before. That's an example. On the José-Vicente side same thing. He is as you know very seasoned manufacturing guy, but he is also going to help a lot on engineering, purchasing in order to coordinate the activities of the region, but there is no change in the organization. The Executive stays the same with all people reporting to me. So this is extremely clear. We keep on doing the business focusing on the business. And at the mean -- at the same time and I'll come back to that working on reviving a new plan for the company. For the Alliance clearly everybody is working on the Alliance because we have so many interaction with the Alliance, but Olivier, José-Vicente and myself, are closely working with Jean-Dominique Senard in order to help the -- how can I say the new [indiscernible] Jean-Dominique said the rebirth -- new breath of the Alliance. We are all going to Japan pretty soon in order to meet the new governance of Nissan, which is going to be in place pretty soon in order to make sure that we're all aligned and define ways of enhancing the work which is being done and should be done at the Alliance level. Clearly, as I mentioned several times, the current project no current projects have stopped. It's -- we're working with the Alliance on this project, the new platform. You just saw the New Juke, which is coming on life is really on the same platform as New Clio who just come live and New Captur, which is going to come live at the end of the year beginning of next year. What we want is really to fuel the pipe as I said last time with new ideas in order to enhance the synergies between the two companies. So that's the -- who is doing what at the level of the company and for the Alliance. But clearly, we're involving a lot all the managers and the Executive Committee of Renault to help us find new areas of synergies at the region level, at the function level which can help the two companies. Now in terms of the new plan, obviously, we're not going to completely change everything. What we want to do is really focus on what matters for the future of the company. We have started this pricing policy and it's delivering as you can see already with the Q3 revenue numbers. We need to continue because we are improving on price but you know that we also have extra cost. I already mentioned that in the pipe. And now we have all the launches of the new models coming. I mean we started with Clio, we're started -- we have new ZOE coming, we have new Captur et cetera, et cetera. We're just at the beginning of the whole new launches. And hence, I think we have a lot of potential for this pricing policy. On the rest, obviously, we're adapting to the circumstances in terms of costs as I already mentioned. And we have started a full review of the Drive Future plan but it's really sorry José, but it's a little too early to mention the routes we're working on. We need to refine. We have quite a few ideas already, which have been put on the paper that we need to be working on before we can announce everything. And we will announce everything when it is ready, I guess in a few months. José Asumendi: Thank you very much.

Thank you. Next question from Kai Mueller from Bank of America Merrill Lynch. Please go ahead.

Thank you very much for taking the call today. Just a follow-up on what you said, obviously, earlier on your sales to partners. Partially it's, obviously, Iran that will lapse at some points, but the other portion is your diesel engine sales and assembled vehicles. Can you give us a bit of color in terms of -- I know this was part of your downgrade for the volumes this year. How you expect this to pan out into the fourth quarter? And then maybe also give us a bit of color, how that pans out into the coming years? And I know you mentioned the Alliance is working. While nothing has been stopped, but are there also changes in terms of demand patterns within your Alliance from Nissan in terms of engine purchases from you? Or is it just to do with the diesel technology being less in favor right now in the market?

Okay. Yeah you're right to point that out, because as you have seen the impact of sales to partner on the third quarter is major. So let me give you a little color. On the sales to partner, I would say that around 40% of that impact is coming from new vehicle, 20% from CKD, including Iran but not only, and 20% on powertrain. So powertrain is really linked to the decline in diesel demand. It has nothing to do with the fact that we are the provider. We are the provider of these diesel engines to our partners it’s just a decline in diesel, which you can really see on the market details. So Nissan less demand, but not only Nissan, Daimler or less demand in diesel engines is not because they are going to shop somewhere else, it is because the diesel demand is down. So that's the first point. Second point is on new vehicle, assembled vehicle, which is a big portion as you can see of the decline. This is linked to actually all our partners for several reasons. Obviously you have Nissan demand of cars, which are mostly Micra and Rogue. Rogue is at the end of its life and Micra is not performing that well to be honest on the European market. So that's the reason. Then you have all the cars that we sell to Daimler. Same thing. We are not providing the Smart Forfour anymore because it's going to be done in China in the future it has been announced. That's -- sorry the two. And also we have a decline in the demand from Daimler. And we also have a decline in the demand of LCV from our other partners that we have as we have several partners on LCV. So it's a decline, which is linked either to the market or to cars coming to the end of their lives. On the perspective for the last quarter, unfortunately I don't think it's going to improve at all versus the same -- the numbers that you have here. It should be around the same level of magnitude, and for 2020 same thing. It's not yet rebounding. We're in discussion with many other partners in order to find new ideas -- in order to find new ideas into -- in order to refuel the pipe. But as I said a week ago these take times. And we should not see a rebound in sales to partner in the very near future, especially also because in 2020 you will still have a decline in deal even though we think it is slowing down. This decline is stabilizing I must say, and then you won't have Iran at all. So that's it. No – sorry, no effect of Iran, no effect of Iran in 2020.

Okay. Which is -- what I follow-up. So basically the underlying is actually getting worse, because the Iran is more in you have to close it. But if you expect the slowdown to continue in that stage, I mean Q4 should have no more Iran effect included?

You're right. Q4 will have no Iran effect included. But nevertheless the impact should be around roughly the same.

Okay. Okay. Perfect. That's very helpful.

Thank you. Next question from Raghav Gupta from Citi. Please go ahead.

Good morning. And I'd like to better understand the support from pricing. And historically, it's been rare that pricing to exceed the FX impact. Clearly, you've kind of changed the policy, it sounds like, but what gives you the confidence that this trend is going to continue? And why the sudden change in policy versus I guess kind of the past few years? That's the first one. The second one, I was going to announce -- I was going to ask if you sat down with your new counterpart the Nissan, but I think you've already answered that. There was some press in recent days that they may sell some of their European plant. As a part of the Alliance, is this something that they would generally consult with you? Thank you.

Yes. I'm not sure I understood your -- the question. Just to be sure, your question is about the ForEx effect compensation, correct?

It was about pricing more generally, whereas historically pricing and FX has generally being neutral the impact of both, you've been offsetting the negative FX. And it sounds like, you've had a change of policy?

Yes.

And I was really just to understand your confidence about this trend where pricing exceeds FX continue?

Yeah, yeah. Okay. Understood. So there are two situations. The first one in Europe, which basically has no ForEx effect. So, in Europe, as we said previously, yes, our net pricing is increasing quarter-by-quarter. And more again in Q3, thanks to the launch of New Clio. And then the launch of New Captur, as I said was a very, very precise and strict pricing policy market-by-market monitored by us. Then out of Europe, we are on top of this pricing policy, which applies also in our main markets out of Europe. We have an additional ForEx effect that we compensate -- more than compensate. And for example, in Eurasia, in America two main regions out of Europe, the net pricing effect is also positive on Q3 offsetting ForEx.

And sorry, just the trend going forward, if I can ask about the trend going forward how you expect that to evolve?

Yes, yes, yes because it's a long-running policy, we expect to maintain this improving trend.

Yeah. I can tell you that in our forecast, we keep on working pretty actively on the pricing effect. So yes, you can expect that to continue. On your second question, first I don't think Nissan has confirmed any of the information that you're relating to. That's the first point. The second point is, you need to know that we have a common team within the Alliance, which is taking care of industrial strategy. So, obviously as it is a common team between the Alliance, everything which does concern industrial strategy is shared between Renault and Nissan.

Okay. Thank you. Thank you both.

Thank you. Next question from Stephen Reitman from Societe Generale. Please go ahead.

Hi. Yes. Good morning. I have two questions. First of all, looking at the AVTOVAZ revenue growth, which is quite impressive, it would suggest that the company itself is performing quite strongly. And I guess that would flow through to the EBIT level. So, it does suggest that the guidance that you've been giving for the second half implicit in the 5% group margin is much more relating to Europe, would that be a fair assumption? And my second question is also on the relationship with Daimler. Daimler is obviously holding the major capital markets events in mid-November, where they're going to be putting their strategy forward. And I think one of the expectations is they're going to be talking more about scale and about getting better economies of scale. So obviously, Renault has been a key partner for Daimler in the past on the diesels and on supplying vehicles. Could you comment on what the relationship is looking like now? Thank you.

So on AVTOVAZ you're right. First AVTOVAZ is doing extremely well. There is a continued success of their product. And same thing they apply the same strategy on pricing, first to compensate any potential FX impact on the parts that they get but also because their product is extremely successful. They have increased the pricing effect on VAZ is about two points also. So very good success of AVTOVAZ. That being said, you need to know that on the turnover, once translated in euro, as I mentioned before, there is first a big impact of FX and second an impact of the elimination between Renault and Nissan. Nevertheless, VAZ is really on the good path. On Daimler, our relationship with Daimler have always been very good and there is no reason for that to change. We are at good discussion on several things. I think you saw, it was a few weeks ago that Daimler confirmed, that they will renew their small van Citan with us working on the next-generation of small vans and the relations are pretty well, pretty good. And we're looking at other opportunities to work on and not necessarily only on the vehicle side it can also be on the mobility side on many other services side. I think there has been some communication in the past on that and these discussions are ongoing.

Thank you.

Next question from Philippe Houchois, Jefferies. Please go ahead.

Yes, good morning. Thank you. I guess, I'm looking possibly for a silver lining in this discussion about the third-party decline. Historically, at least my perception has been that there is a disproportionate contribution of third-party business to the earnings of Renault. And clearly some of that business isn't coming back next year but it means also we don't have the headwind next year. And I'm just trying to understand to what extent what is the contribution of this business to your profit warning? And that we should think about how next year will actually not have this incremental negative? And if you can squeeze second question is I think there's been discussion which seems like Nissan is about to kill the Datsun brand. And a big part of Datsun production I think is done by AVTOVAZ in Russia. Is that material or if you just ignore that?

Okay. On the sales to partner, first the contribution of the sales to partner is extremely different depending on the type of business we have with our partners. So let me take just a minute to drive you through that because I think it's important. On the assembly car, if it is an assembly car that we do in one of our plants for the benefits of a car which is designed and completely the proprietary of our partner, we only have a small margin on the value-add cost, basically the manufacturing cars in our plant. This was the case for Micra et cetera. So that is something where the contribution is not that strong. If it is one of our car, we own the IP and we sell to one of our partners in manufacturing in one of our plant just like we do on LCV for example, then you have a good margin because you have the margin which is linked to the IP of your car. So you can see that just on that topic the contribution margin is extremely different from one very small cost plus benefit on the one hand and a real margin on the other hand. On powertrain, we used to have very good margin because we used to own the IP clearly. And on CKDs, it depends but usually also the margin was comfortable. So that's why you cannot take an average of contribution margin for all the sales to partner business. So now the second part of your question on that sales to partner is did that contribute to the profit warning? The answer is yes. I mentioned that last week. Clearly the decline we see on sales to partner especially on newer vehicle is higher than what we had expected at the beginning of the year or even at the end of July. The third part of your question, if I'm correct was relating to Datsun. Datsun in VAZ is not significant. So if the volume is low. So if it was to stop the volume, it's -- okay, we’ll have an impact on VAZ but clearly it's not significant.

Okay. Thank you very much.

Thank you. [Operator Instructions] We have a new question from George Galliers from Goldman Sachs. Please go ahead.

Good morning and thank you for taking my question. Just returning to the sales to partners, clearly Renault has the e-Tech technology, which you will use next year in clearing Captur. Is that a technology, which you've had any interest in from third parties, and could potentially supplement sales to partners in the future, is my first question?

Okay. First, it's a technology which is available for the Alliance. If Nissan deems it's appropriate, obviously we will share with Nissan. At this stage, it's not completely the case, because the needs of Nissan, especially in Japan and other countries, is better appropriate for e-Power than for e-Tech, but there might be also opportunities for Nissan to look into that. And obviously, we are available to share with other partners, any of the technology that we have. This is part of the plan to reduce our R&D spend, that I mentioned before in the past. Any -- we have a lot of partners knocking at the doors -- potential partners, sorry, knocking at the doors, willing to share either our strength in LCV, our strength in EV or our new technology in terms of hybrid. So currently there is nothing signed that we can announce, but obviously this is open.

Thank you. And then you've also mentioned the incremental costs associated with fuel saving technologies and CO2. Clearly the e-Tech offering seems to offer significant improvements in fuel consumption and attractive electricity driving in cities. But can you give us some idea of what the cost of the system is in terms of material impact versus a 48-volt system or a plug-in hybrid system kind of, from your sort of peers are using in terms of more conventional on technology?

Well, I think it is all too confidential at this stage. I guess everybody is implementing that. It's -- it would be a competitive advantage for us, and removing a competitive advantage for us to provide you with this type of information. I am sorry, I can't give you that information.

Okay. Thank you. And then just one final question. Has the Board set any timing around when they would like to confirm the CEO position? Clearly there are a lot of moving pieces at Renault at this point in time and you said your mid-term targets are under review. Therefore, is there a deadline by which the Board would like to have the CEO position resolved?

Well, clearly I think what the Board has said is that they want to make the appropriate work in order to look at the potential candidates, but there is no -- there is an intention to do it as soon as possible in order to stabilize that company for sure, but there is no specific deadline to my knowledge that has been said.

Great, thank you very much.

Thank you. Next question from Tom Narayan from RBC Capital Markets. Please go ahead.

Yeah, hi. Tom Narayan, RBC. Thanks for taking the question. I got to ask this, I wasn't able to ask this last week. But how much of the operating income guidance cut for 2019 was from R&D versus non-R&D? I've getting a lot of questions on this all week. And how much of this R&D cut was CAFE related and non-CAFE related?

Well, I don't think we did provide -- I mean it's a Big Mac of everything. As I told you before, there are several reasons we have for the guidance was market-related, sales to partner and costs. And in the cost, a big of the portion of that is linked to, the cost we have to embed in the car for a new regulation plus R&D that we haven't cut as much as we can. So it's a mixed bag of many things. No specific allocation.

I guess what people are just trying to understand is order of magnitude is this R&D impact like more than half of the operating cost increase or the EBIT cut? People are just, so I am trying to understand that order of magnitude of that I guess, like how big is that impact I guess?

Well actually what I could say is, -- well actually you have slightly more than 50% on volume/sales to partner, and the rest being cost.

Okay.

And in the cost a portion of that is linked to regulation i.e. the cost in the car and the R&D.

Okay. That's helpful. And then my second question, when will we know the specifics on your guys' EV plans? Some of your peers in Europe have broken out the rollout of plug-in hybrid versus BEV, those sorts of things. Are you guys planning on doing like an EV day or a deeper dive disclosure on what your specific EV plan is for compliance for 2020, 2021?

Actually having some kind of a field trip or something on EV is in our plan to make you -- give you a little more detail on where we stand on EV? What is our plan? But we are a little more cautious than others, on announcing in advance. Our new car on EV because contrary to others we're already selling ZOE which is pretty -- selling pretty well, and we don't want to take risk about that. But basically we believe that we should be able to reach next year approximately 10% of our sales between BEV and PHEV, not taking into account HEV. And EV should be above 100,000 sales next year.

Okay, perfect, thank you.

Thank you. Next question once again from Mr. Philippe Houchois from Jefferies. Please go ahead.

And thank you for taking me back. I was just curious about that you said in your response to Datsun is not that material for that fine. I'm just wondering at some point, are you at a stage on Renault, where you're looking at activities that are not material for the group? And if it's no serious enough at this stage to consider whether Renault should continue doing Formula One if Samsung makes Nissans or if Alpine makes Nissans? I'm just trying to gauge if that -- those issues are on the table? Or do you think it's just not severe enough to actually consider those topics?

Well I have not specifically targeting those two activities that you mentioned. But clearly the review of the Drive the Future plan means that we put on the table, it's like a normal process. It's just not a minor review. We're really launching a deep review of our Drive the Future plan, in order to take into account the new context of the market the new -- the change in usage mobility et cetera and the current situation of the group. So, everything can be on the table at some point. This is a deep review of our strategy and of our plan.

Thank you.

We don't have any more questions.

Okay. So as there no more questions, it's going to be the end of this call. Thank you for being on the call this morning. And if you have further questions, feel free to call us, we'll be happy to take your questions, during the day. Have a good day. Bye.

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