Good day ladies and gentlemen and welcome to the Volkswagen AG Live Audio Webcast and Conference Call on the First Quarter Financial Results 2019. For your information, today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Oliver Larkin, Head of Group Investor Relations for Volkswagen AG. Please go ahead sir.

Thank you, operator. Ladies and gentlemen, welcome to Volkswagen's conference call for investors and analysts on the results for the period January to March 2019 based on the interim report we published early this morning. For today's conference call, I'm delighted to be joined by Frank Witter, Member of the Board of Management, Volkswagen AG responsible for Finance and IT; and Director of Group Sales, Dr. Christian Dahlheim. As always, you can find today's webcast on our website where you can also find the charts for you to download. Most of you will have followed the webcast from this morning's press call, so our aim for this event is to dive into enough detail to satisfy your specific needs as investors and analysts. And of course, following the presentations, we will gladly take your questions. Let me now hand you over to Frank.

Yes. Thank you, Oliver and a warm welcome to all participants of this call. After this morning's stock price performance, I was for a split second, at least, inclined to cancel the call because where do you want to go after that performance. On a more serious note, the Volkswagen Group kicked off the year with a good start despite a very challenging environment. The underlying operating result before special items came in at €4.8 billion versus €4.2 billion in the prior year comparable period. This led to an operating margin of 8.1% before special items. Whilst I much appreciate the improvement compared to the prior year period, it is important to understand the drivers behind this before jumping to the wrong conclusion. Alongside upsides in certain brands, a further significant driver was the positive swing of €0.4 billion alone from the fair value accounting of derivatives under IFRS 9. This position is as we all know highly volatile. As such, the substantial swing from negative last year to positive this year clearly demonstrates that. Furthermore, we had a positive of €100 million from FX in the quarter. Unfortunately, it was necessary to book special items for legal risks in the first quarter amounting to €981 million. Please understand that we cannot provide further details about this today since relevant proceedings are still ongoing. After special items, the operating result came in at €3.9 billion. Given the overall market conditions, our unit sales for the first quarter were quite strong at 2.6 million. Christian will give you more color in just a few moments. Our sales revenue at €60 billion came in 3.1% above the prior year. The financial results came in at €0.2 billion around 30% below the prior year. The decline was mainly related to interest rate changes relevant for long-term provisions. Equity result, which as you know mainly driven by the Chinese joint ventures, amounted to €0.8 billion just slightly below the prior year. Profit before tax at around €4 billion was down compared to prior year, mainly reflecting the hit from special items. The profit after tax came in at around €3 billion. Automotive net cash flow before diesel outflows and M&A came in at €2.5 billion. We all realized fully how important this position is and we will go into the details following Christian's update. As expected, automotive net liquidity at €16 billion, showed a significant decrease in Q1 compared to the end of last year. The decrease was mainly due to the impact of the change in accounting for leasing under IFRS 16 of €5.1 billion. On top of that, the tender of further MAN shares after the end of the domination agreement triggered further payments of close to €1.1 billion. On the positive side, we received in Q1 Chinese dividends of nearly €0.6 billion. As you might have heard me confirm this morning, we stick to our full year guidance. This certainly includes our return on sales for the group before special items of between 6.5% and 7.5%. Let me now hand over to Christian.

Thank you, Frank. Ladies and gentlemen I would also like to extend a warm welcome to this conference call and present the sales results for the first quarter this year. Since most of you have already listened to this morning's conference call, I will hit the highlights and not go through all brands and all regions. Since the beginning of the year, the Volkswagen Group delivered a total of 2.6 million vehicles to customers worldwide. After the last year's record first quarter for many of our brands, this makes a solid start into the year just 2.8% below 2018 on a year-to-date basis whereas the total market was down by 5.6%. Frank has already pointed out we have increased our sales revenues at the same time. Volkswagen experienced decline of 4.5% compared to last year, resulting in 1.45 million vehicles delivered to customers. Although the new models such as T-Roc in Europe as well as Tharu and Tayron in China performed well, market downturns in China, Turkey, and Argentina in particular, burned the brand's performance. Let me highlight brand Fiat which concluded the first quarter with a record of over 150,000 cars delivered, achieving the highest sales volumes in the brand history for an individual month in March. Year-to-date this post an increase of 8.9% compared to last year. Performance was particularly favorable in the stagnating or even decreasing markets in Western Europe led by Germany, Spain, and the U.K. On the model side, mainly the new Cupra Ateca as well as the Arona and the new Tarraco recorded notable sales figures. Audi delivered year-to-date 474,000 vehicles to customers, a minus of 3.6% compared to the first quarter of 2018. While deliveries in the biggest market China continued to grow, we posted a new record in March. The limited availability of model variance due to WLTP could still be felt in Europe. Additionally, model changeovers such as the Q3 in the United States negatively affected the brand's performance in certain regions. Porsche delivered 56,000 vehicles to customers from January until March, 12.3% less than in the strong last year's period. Again the repercussions of WLTP could be observed in Europe. Additionally, model changeovers of the 911 as well as the Macan further dampened growth, while the new Cayenne already contributed positively. In China, Porsche's biggest single market, deliveries decreased as a result of the weakening overall market condition as well as customers withholding orders and expectation of the lower value-added tax rate as from April. While sales in the second biggest market the U.S., continue to grow by 7.7%. Allow me now to hit the regional highlights. Again, also here, I would focus on the most important regions in terms of changes. The North American market decreased as the U.S. remained slightly behind its high level of last year and economic difficulties in Mexico continued. Year-to-date, our deliveries declined by 2%, mainly due to the situation in Mexico. However, we increased deliveries in the U.S. by nearly 1%. Total demand in Western Europe shrank in the first quarter among others, due to the ongoing WLTP changeover uncertainties around Brexit as well as declines in Italy and Spain. Deliveries were maintained on the level of the prior year. Total market in Central and Eastern Europe recorded further gains. Our deliveries decreased slightly as the positive performance in Russia and Poland was dampened by market-related downturn in the Czech Republic, which affects us given our high market share. While the recovery in Brazil continued at a high growth rate, the drastic market slump in Argentina further dampened the South American market. However, the increase of our deliveries in Brazil, overcompensated the strong market-related decline in Argentina. Demand in the Asia Pacific region decreased by 6.6%. This was impacted mainly by China with the announced VAT rate cut and the ongoing trade conflict with the U.S. heightened the reluctance to buy. Deliveries of Volkswagen Group vehicles recorded a decrease of 6.5% in Asia Pacific and 6.3% in the first quarter. We could however increase our market share in China, thanks to our new SUVs. Despite these difficult macroeconomic developments, we expect worldwide a slight increase in our deliveries to customers for the full year 2019. As we have told you in the last conference calls, our SUV offensive is a key pillar of our strategy and is the driver for growth and profitability. 2018 SUVs were the main driver of Volkswagen Group's growth. Many group brands introduced new or renewed models, leading to a global share of 23% with regional differences. In North America, our SUV share increased from 30% in 2017 to 43% in 2018, but in Europe it reached 25%. In China, it was at 20% with the introduction of new models such as the Tharu and Tayron especially in Q4 of which we will see the full effect this year. For 2019, we plan a further increase around 33%, which is in line with the number we showed you in the previous conference calls with the highest growth in China. Besides the new models introduced last year, we'll widen our global SUV portfolio with the launch of new products such as the SEAT Tarraco Audi e-tron, Porsche Cayenne Coupé, VW T-Cross or Teramont X. At the Auto Shanghai motor show, you already saw a glimpse on even more new SUV highlights in the future. SUVs are also a key part of our e-mobility offensive. The future will bring today's two megatrends together, e-mobility and SUV. Thus, we will push to increase the share of electrification in SUVs across our brands even further. In closing, let me take a closer look at the development of the deliveries of battery electric vehicles over the past and our expectations for the coming months. As you can see, until 2018 the group's best portfolio consisted of just three models. That's the first in a row of many more to come. The Audi e-tron is the Volkswagen Group's first purely electric SUV and it's already being delivered to customers since March with an excellent response. We're also very pleased with our order bank. Volkswagen Group's first electric sports car, the Porsche Taycan will enter the market over the course of the year. More than 20000 people have already signaled their interest in buying. We're also starting the rollout of our MEB platform for the first pure battery electric vehicles in our volume brands. Preordering of the Volkswagen ID. will be possible for May 8, marking the start of many more ID. models to come within the following years. In China, we'll introduce electrified versions of the popular Bora and Lavida, which will scale up our e-volume significantly. Overall, 2019 will be a key year in the group's electrification offensive and marks the start of a new era. Moving on to 2020, Volkswagen Brand will continually increase the sales of the ID. Volkswagen will also introduce next year the new ID. Crozz being the first fully electric SUV based on the MEB platform. Now, I would like to hand back to Frank.

Thank you, Christian. Moving on to look at the group operating result performance for the first quarter in more detail. The position volume/mix/prices in the Passenger Cars segment reported a plus of €0.2 billion. Even though certain brands suffered from some volume decline, strong product mix was a compensating factor. This reflects our increasing SUV mix in high-margin countries. Pricing was also clearly a positive contributor. Exchange rate including the valuation of certain derivatives in total had a positive impact of around €0.5 billion so far this year. Please remember that the positive effect of 0.1 -- €0.4 billion from IFRS nine is also included in the exchange rate block just to recall. Gains and losses from the valuation of derivatives at fair value which are not designated within hedge accounting are now booked within the operating result. The amounts are highly volatile depending on the components of our hedging strategy in particular duration type of instrument and the degree of hedging. As you're aware, both currency and fair value valuations can fluctuate greatly during the year. Therefore, it doesn't make much sense to speculate now on where it's going for the full year. Now taking a look at product costs. Despite rising material prices, we achieved cost savings of €0.2 billion year-to-date, continuing with fixed costs which rose in Q1 by around €0.4 billion. Within the fixed costs R&D increased by about €0.2 billion, negatively impacting the P&L. The increase was due to a lower rate of capitalization in Q1 of around 33% versus around 36% in the prior year. Depreciation on CapEx and ramp-up costs were also higher than the prior year. I can assure you that each individual brand is being tasked to achieve further improvements in fixed costs especially through sharpened efficiency programs. The overriding principle is that the brand's margin target must at least be secured. We know that the very high level of investments are necessary for the electrification of our product range the digitalization, the transformation of the industry the expansion and refurbishment of factories. Therefore, it is a must that cost discipline is kept in line. To wrap up on this chart as mentioned earlier, we had to book special items of almost €1 billion. Turning to the brands in more detail. Volkswagen Passenger Cars managed to achieve an operating result in Q1 of over €0.9 billion, a 5% increase versus prior year. This corresponded to a return on sales of 4.3% compared to 4.4% last year. Efficiencies, cost reduction and product mix were the key positive contributors with volume and negative currency impacts dragging on the result. Audi reported an operating profit of €1.1 billion, compared to €1.3 billion in the prior year. Higher ramp-up and runoff costs were almost compensated by mix and positive currency impacts. As expected, the lack of availability of certain models caused by WLTP homologation issues was also a burden. At the end of Q1, Audi has been close to having homologated all engine transmission variations from the first wave of WLTP. As you recall, the deconsolidation of the national sales companies doing multi-brand business came into effect as of January 1st, leading to a reduction in revenue. This resulted in a corresponding improvement in the operating margin as a consequence. ŠKODA posted operating earnings of around €0.4 billion, a touch below the prior year period. Negative FX effects and costs for new products and technologies were key headwinds. On the other hand, volume increased. Pricing and cost savings were positive. At €89 million, SEAT posted a good operating result. Growing SUV volume and mix effects more than offset the costs relating to new product. Bentley got back in the black zone and posted a positive operating result of €49 million. Availability of the new Continental GT positive mix and FX effects as well as the success of the turnaround program were the drivers. Porsche delivered an operating profit of above €0.8 billion versus over €0.9 billion in the prior year period. Decline in volume and costs related to new products were the key causes. At 15.9%, the Porsche margin continued at a high level. Volkswagen Commercial Vehicles came in strongly at just a touch below €0.3 billion, mainly driven by higher volume. Scania increased volumes and had positive FX impacts that more than compensated for cost increases. This resulted in an operating profit of around €0.4 billion. MAN Commercial Vehicles brought a positive result of €115 million due to higher volume. To round our comments on our industrial business up, Power Engineering came in at €9 million. Moving on to Volkswagen Financial Services, they had a strong quarter coming in at €0.6 billion, slightly above the prior year. This was very much in line with the earnings of the full Financial Services division, which also reported higher earnings at €0.7 billion. At plus, €28 million the famous Other line came in much more positive than the comparable period last year. As you know, this position consists of elimination of intercompany profits as well as the earnings from non-brand companies, such as Porsche Salzburg and for example PPA cost allocation. In Q1, the positive development was to a relevant extent due to the valuation of derivatives at fair value under IFRS 9 and other currency effects, which together totaled €0.5 billion. Volatility in this line is and will be very difficult to forecast and reflects the global nature of our business as well as the cross-supply of components and vehicles between our brands. Let's now take a closer look at the underlying automotive net cash flow. Cash outflows for diesel amounted to €0.2 billion. Just remember, in Q1, the prior year the number was €0.8 billion. The cash-out in the quarter for M&A activities of €0.3 million related for example to the acquisition of WirelessCar. In the Q1, prior year this was a plus €0.1 million due to the revaluation of VER. After cleaning net cash flows for the amounts, the underlying cash generation was €2.5 billion, which relates to a €3.1 billion in the prior year period. Yes, all-in-all, this is a positive outcome. Nevertheless, I personally class it as a relatively weak one, and this is not where we want us to be. Our working capital management in the Automotive Division is not yet at benchmark. We came in with a deterioration of minus €2.7 billion substantially worse than the prior year, which was at minus €1.1 billion. Within working capital, the further provisioning of special items of €1 billion impacted positively. The dividend declared in Q1 by the Chinese joint ventures, and this one here relates to SAIC amounted to €2 billion. After deducting the payment received of €0.6 billion, the outstanding receivable was €1.4 billion. The portion of working capital deterioration due to higher stocks is the most critical piece. Destocking and getting back to ideal stock levels do have top priority on our business agenda. At the same time, you know fairly well that trade relations and tariff uncertainties do warrant relevant precautionary measures in stock management where it applies. Furthermore, some regions had higher stocks due to particular homologation issues that were not related to WLTP. Overall, I would suggest that we don't get too hung up on individual quarters, as we confirm our floor of €9 billion for automotive net cash flow for the full calendar year. Let's now move on to CapEx and R&D. CapEx at €2 billion was in line with the prior year. The CapEx ratio for the first quarter was 4% also pretty much on par with last year. Total research and development costs, or let's call it cash spend came in at €3.5 billion more or less in line with prior year. Capitalized development costs came in at minus €1.1 billion versus minus €1.2 billion last year. As mentioned earlier, the capitalization rate in Q1 was around 33% versus around 36% in the prior year. Strict discipline in our investment and development processes is wider. We are not yet there and 2019 is a crucial year as we bring engines and BEVs to market to meet our CO2 goals. We will do everything in our power to deliver also on cash flow and nothing has changed in our view that cash is king. As already explained, Automotive net liquidity at €16 billion decreased significantly in Q1, mainly due to the impact of the change in accounting for leasing of €5.1 billion. Diesel related cash outflows were €0.2 billion so far this year. In Q1, we received Chinese dividends of nearly €0.6 billion. As mentioned earlier, the tender of further MAN shares after the end of the domination agreement led to further payments of close to €1.1 billion. I can confirm that we maintain our minimum target for Automotive net liquidity of 10% of group revenue. Now let's get on to our final chart. Everyone agrees 2019 is a pivotal year and one that is very important for us. We are ramping up for e-mobility and gearing up to face the CO2 challenge. In addition, there will be strong product momentum in the course of the year. However, we learned some very hard lessons from the first wave of WLTP. Although, we are much better prepared for the WLTP second act EVAP and RDE, it will still be a challenge. The framework conditions and macroeconomic uncertainties have not gone away. Brexit U.S. tariffs with China and Europe as well as foreign currency swings are some of the key issues. I think it's fair to say that, this year will be an interesting one for the entire industry. From where we are now, we expect a solid full year in terms of volume operating result and cash. For now, we are sticking to our guidance for deliveries to slightly exceed the prior year for revenues to grow as much as 5% and for the operating margin to be in the range of 6.5% to 7.5% before special items. As you know us by now, we stay realistic when it comes to targets. Our overall goals have not changed. We continue to push as hard as we can. Let me now hand back to Oliver.

Thank you, Frank. And now to the operator to take questions from investors and analysts please.

Thank you [Operator Instructions] We'll take our first question today from Tim Rokossa from Deutsche Bank. Please go ahead.

Yeah. Thank you very much. Good afternoon. It's Tim from Deutsche. And Frank thanks for still deciding to do this call despite the stock being up as much as it is. And thank you for taking my questions. I would have two please. The first one is on the free cash flow. Frank you said, it's quite weak in your opinion and it obviously is good that you think that and you strive for something better. But I guess a lot of people were actually quite positively surprised by the €2.5 billion underlying. What has really driven this despite the very strong working capital headwind that we've seen? And most of your competitors were actually quite weak in the first quarter while this is a decent result specifically considering the €1.4 billion China dividend receivables. What is really improving the free cash flow generation there and the conversion specifically? Secondly, for either Christian or you Frank also for many investors your SUV push story is quite important as you also said. It seems to be really starting to kick in now. We see a bit of tailwind on the mix and pricing side that is offsetting the volume shortfall. What does this mean for the volume/price/mix item in the bridge this year? And when is the SUV impact really peaking out in terms of an EBIT tailwind? Thank you.

Okay. We will split that perhaps between Frank and Christian. We'll start with Frank.

Yeah. Hi, Tim. Yeah, I think in life as always things tend to be relative. Certainly, if you look at the overall net cash flow number before diesel and M&A I think there are certainly other people who wish to have a positive €2.5 billion number. But if I look at the details and that's certainly what we do on the inventory side, we are not where I think we should be. Just to also make it abundantly clear that we are not sitting on our hands. You might remember from earlier discussions that when we were planning for 2019 pretty much at the time when we did our five-year planning round we altogether and the entire industry were quite a bit more optimistic for 2019 and thereafter. We all know that obviously some economic indicators are hinting in the wrong direction. Just to give you a headline number, we took out of our overall plan compared to the original budget for the calendar year 2019 on a worldwide basis more than 430,000 cars. I think that is quite a number. And we will continue to do so, if the second half in particular is not going to be at the level as we see it now in our revised plans. I indicated earlier in previous discussions that, if you look at the sales distribution results the calendar years, we are relying quite a bit on the second half. You might remember my arguments where we talked about the total free cash flow for the Automotive Division in the calendar year 2019. And therefore, we continue to have a focus. We are reviewing the brand's inventory situation one-by-one in the Board meetings of the group. So, we clearly have a focus. Everybody in the organization understands the importance of our commitments to the capital markets particularly as it pertains to free cash flow. And that's the way you should take my comments regarding free cash flow. It is in light of what we could do and what we could improve throughout the calendar year. Confirming the full year – the floor of €9 billion you can see the confidence that we get our act together, but we have work to be done and that's what I wanted to hint to. Christian will talk about the second part. Let me just indicate that it is very fair to assume that for the full year bridge volume/mix/price is continue to be a very, very important part of the occasion. And for the full year different to the first quarter, we expect volume also to be on the positive side in that bridge. But now I hand it over to Christian.

Thank you, Frank. Yeah, Tim, first of all, I think as I'd already indicated also during the Investor Conference earlier this year that of course managing revenue is as important for sales as managing number of sales. So you see an increase in revenue despite a decrease in AAK. I mean you're right to assume that of course SUV is a key driver for that positive effect, next to a positive country mix effect. Second part of your question was about the level we expect. We're currently at about 33% SUV mix for the end of the year, and we see that climbing to a further roughly 40% in 2020. Then of course, there's a natural threshold due to CO2 regulations, which we think we can break if we introduce our electric SUVs. So if you include electric SUVs, as we would in the equation, a bit look in the glass ball, but we believe that between 40% or 50% SUV mix is probably a realistic number to be seen in the future. Again, only possible with the electrification of the SUV portfolio.

Great. Thank you very much both of you.

Okay.

Thank you, Christian. Thank you, Tim. Let’s take the next question please.

Thank you. We'll take our next question now from Patrick Hummel from UBS. Please go ahead.

Thank you. Good afternoon, gentlemen. Also two questions from my side please. The first one is regarding the slide number 8 where you show your expectations for BEV sales. So, a significant step-up in 2020 to more than 500,000 units, and looking at the launch cadence, it seems like VW brand is going to have the lion's share volume-wise out of that. So I'm just wondering now your margin at the VW brand level is within a 4% to 5% corridor, which is sort of what you expect also for 2020, but we've heard quite cautious comments from you guys in the past about the profitability of the first MEB vehicles, and they seem to be very significant volume-wise already for 2020. So just trying to square things here, where do the incremental improvements elsewhere come from to keep you in that margin range at VW brand level in 2020? And will we get by the way a price announcement on the 8th of May, when you open up reservations for the I.D. Neo? And my second question very simple. Frank, you -- or the Board of Management has decided to pull the TRATON IPO because of the market conditions. Just a couple of days after the Capital Markets Day, which came as a surprise or also a disappointment to many, because it didn't seem like back then market conditions were that bad. So what should we expect on that front? And also in terms of further disposals that Herbert Diess talked about at the CMD for the remainder of the year, is basically there something to be expected for the second half of the year? Or have you shelved basically all the plans and will revisit at a later stage? Thank you.

Yeah. Patrick, yeah, let me start with my pieces, and at least the difficult stuff for Christian. Yeah let's start with the TRATON IPO. Certainly timing, I'm sure raised some eyebrows. But there was no intention to mislead you at the Capital Markets Day. But there was only a very, very short window in which we're in the position to make a final decision regarding the timing of the IPO because from a technical perspective, there's only a limited window in which you can use audited 2018 financials. So we had the day before the Capital Markets Day, the night of the Capital Markets Day or the day thereafter, and that's what we decided on to make the final review and discussion. As we hopefully made it abundantly clear, the entire Board still believes that the TRATON IPO is very much desired as much as we believe in the global champion strategy of TRATON under the fine leadership of Andreas Renschler. Nevertheless, throughout the entire process we also confirmed that as much as we desired the step, we will not do it at any cost. And we came to the conclusion that at this very point of time, the conditions were not leading to a result being basically at the fair value of the asset. But, it is still something we have a high degree of interest in, and it will be revisited at due time. The Volkswagen margin, the increased share of BEVs, and Christian is going to talk more about the great product. But obviously in our margin guidance, we have fully included the higher share of full electric vehicles in our Volkswagen Brand portfolio. That is increasing the pressure on us as we first time laid out in the Capital Markets Day in 2017. And it is our job to offset those headwinds for the overall portfolio margin. With the respective efficiency improvements, you can call it the future pact on Volkswagen Passenger Cars side. But you might remember from the last Capital Markets Day, each and every brand including Financial Services and the central cost centers, do have specific programs in place to improve sales performance, cost and efficiencies in order to offset and overcompensate. On the Volkswagen side, on top of view, you might remember the substantial losses we have been incurring in North and South America and to get to breakeven for both regions is certainly also positively helping. So, the best expansion of the BEV portfolio is in the 4% to 5% margin target, and the brand pulled the 6% as the next milestone forward to 2022. And I don't expect the brand colleagues, which are going to be available for Q&A. I'm not sure whether that's tomorrow or next week. Nobody will pull those milestone numbers and the details the colleagues will explain. And now, I hand over to Christian.

Yeah. Patrick thanks for your questions. So your first question EV sales. First of all, yes, you're right we're quadrupling or quintupling our sales to almost 500,000, but we will still see that as a limited supply hitting a strong demand. So to answer your question on profitability, our go-to-market strategy, we clearly see some opportunities on technical level spend since we clearly will go for consistent leasing or usage-based go-to-market strategy. And as you also know, we have agreed with our dealer buddy to reduce their margin on electric vehicles, meaning we maintain more of the profit on our side and also more actively managing technicals. And then at the same time of course, I mean that's the reason for the high mix of SUVs. Of course the overall margin of the brands are a mix of highly profitable cars i.e. SUVs, and then at least initially maybe slightly less profitable cars battery electric vehicles. But again, especially in the first year as we see opportunity, the demand probably strong and we can actually proactively manage our technicals. Second part of your question, yes we will get a price announcement on May 8. And as we have communicated that price will be roughly in line with the cost you will incur for a comparable gas or diesel-based engine. So, stay tuned for May 8, and bring your order in, if you like.

Thanks, gents.

Okay. Thank you. Let's move on to the next question please.

Thank you. We'll take our next question now from Dominic O'Brien from Exane. Please go ahead. Dominic O'Brien: Hi, there, guys. Thank you for taking my questions. I've actually got three questions all on working capital and inventory. Firstly, you mentioned that you're not near the benchmark level of inventory at the moment. So can I ask how much of the recent buildup has been due to structural issues and inventory needed to run the business today? And how much of that is temporary and due to things like regulation and model changeovers? And then following on from that, if we did get to the benchmark level of inventory, where would you think your inventory would be versus the nearly €45 billion on balance sheet today? And then finally, you mentioned that each brand was constantly reviewing its inventory position. But it looks like this quarter the higher inventory level was because production ex the China JV was about 100,000 units higher than wholesales in the quarter. So can you just explain why we saw that mismatch between production and wholesales? And how should that play out in the coming quarters? Thank you.

Yes. Hi, Dominic. Yes, I mean, you're absolutely right that we are currently not at ideal stock level. It's always a mixed bag. There are some elements, as I also indicated in my speech, which are at this very point of time leading to higher inventory, but I would call them acceptable. I referred, generally speaking, to the tariff situation, which might warrant some precautionary inventory levels. We had timing issues between the quarters due to homologation, which led to some over-inventory. We had some stop actions, which is a timing issue, to give you another one. We knew that due to the WLTP ramp-up was in the year, Audi and Porsche would clearly have weaker Q1, probably also to a certain extent Q2 relative to where they could be. So these are a number of reasons where the gap is acceptable. But in some instances, we will also need to take a closer look and are going to do so on the production plans for the rest of the year. Yes? So this is the issue and how we address it. And just to also give you a real-life example that we also go to the heart of it. You might did pick up in the press that we canceled night shifts in Wolfsburg and lately in Ingolstadt, quite important in terms of production, but also in terms of production costs. So comprehensive answer, I think, we -- if I look at the full year, that the importance of the second half also for total sales and deliveries, when you take where we are today and the outlook for the full year. So there are uncertainties towards to the second half, but we are determined to be best prepared for that period. But at the end of the day, we get to a number for the full year in terms of free cash flow, which is going to please everybody, including us internally. Dominic O'Brien: Okay. Can I just follow up a bit? This might be a bit of an unfair question. But if we didn't have any of these temporary issues with regulation and tariffs, et cetera, would the inventory be -- could you give us a rough idea of where inventory would be? Could it be 10% lower do you think than where it is today? If you could give us any guidance at all on what you're incurring at the moment that you think is special to the current circumstance that would be great.

I mean just to give you a ballpark number I think 45,000 is probably a ballpark number just to give you a flavor. Dominic O'Brien: Thank you very much.

Because ideal stock in our definition is always depending on the expected sales to come, so this is not a hardcoded number. It's a relative one. But the 45,000 is a good one to work with for the moment. Dominic O'Brien: All right. Thank you very much.

We'll take the next question, please.

Thank you. We have a question now from Stephen Reitman from Societe Generale. Please go ahead.

Hi. Yes. Good afternoon. I have two questions as well, on the smaller brands. Bentley, obviously a very strong improvement there. Do you think that's sustainable for the rest of the year? And my second question is on Lamborghini. Sales were about 12% less than Bentley, but just under 2,000 units. So on annualized basis it looks like they're getting close to 8,000 units or so, which is quite a substantial figure as well. I think at the November, when we're discussing the plan, the CapEx plans and you first mentioned about Audi cleaning its operations and divesting some of the non-associated companies. You talked about essentially also would -- it will be their decision whether they decided to give more information about Lamborghini. But it would certainly be helpful for you to give us some indication to how its profitability has been developing, even if you don't -- can't give us the exact margin figures.

Yes. Hi, Stephen. Yes, Bentley, I appreciate your comment on Bentley. It's -- I called the guys in the latest CFO call, we had internally the turnaround kit. I think it's quite impressive what the guys did accomplish in the first quarter. But I think your question indicated also to the full year. For the full year, breakeven would be a good number if you recall the minus €288 million where we have been ending up in 2018. So the allocation of the business with the continued launch and ramp-up costs will leave its mark. But breakeven is maybe a bit better, but pretty much what they have in the books and what our outlook would ask for. Lamborghini, Christian might later comment on the Urus and what it is doing for the brand. Without giving you specific numbers, as you were suggesting, Stephen, but we finally seem to have fun with that brand to an extent that the CFO can be pleased. The minimum, in order to make such a comment for a luxury brand, is a double-digit RoS number.

Thank you. And maybe just, Stephen, just to add. I mean, I think, you look at sales figures which we've been reporting, I think, it's fair to say, of course, for brands like Bentley and even more so for Lamborghini, the pure sales figures actually aren't that relevant, because we of course like to produce a few cars less than the customers want. You know that the Lamborghini growth, just to add, is of course driven by the phenomenal success of the Urus, which has been a fantastic success and fully in line with targets. And the same is true for Bentley with the Continental GT, so just to give you some flavor on the product side.

Thank you.

Okay. Thank you. Next question, please.

Thank you. We'll now go to our next question today from Dorothee Cresswell from Barclays. Please go ahead.

Hi, guys. It's Dorothee Cresswell from Barclays. Thank you for taking my question. I wondered whether you could comment a little bit on the market dynamics for China just the latest developments there given now that the VAT cut has happened and it seems that those trade tensions are easing a bit. And then perhaps you could also comment on the prospects for those Chinese earnings that you consolidated equity and what you foresee there for the full year given quite how well they've held up in the first quarter despite the volume decline? Thank you.

Dorothee maybe I'll start with the market dynamics and hand it over to Frank for the second part of your question. Obviously, the first quarter in China was weak, but we already see an uptick in demand due to the VAT decrease. And as you know the government is discussing further measures to potentially push demand. So we continue to believe that China will be very slightly above last year, so we'll have a more positive development in the quarters to come Q3 to -- Q2 through Q4 to catch up what has been lost in Q1. That's our current expectation.

Yes. With respect what does it lead to, obviously the overall market continues to be challenging which makes the forecasting of the financials and cash flow numbers not really easier. But we stick to what we said earlier regarding China. The proportionate operating profit for the full calendar year 2019 should ideally be pretty much in line with 2018, which require us a lot of hard work on the cost and efficiency side. The same seems to be true for the -- at equity results and we also expect a similar level of dividends declared by our friends in the joint ventures.

Thank you.

Okay. Thank you very much. We'll move on to the next question please.

Thank you. We have a question now from Horst Schneider from HSBC. Please go ahead.

It seems like we've lost Horst. Let's take on -- let's move on to the next question. And Horst, if you're there perhaps you can come back to us.

Thank you. Our next question now is from Jose Asumendi from JPMorgan.

Hi, Jose, JPMorgan. Hi, Frank, Christian. Frank, can you help us at least quantify for the Volkswagen Brand, the opportunity you have to improve the profitability or reduce the losses in other words in North America and Brazil? And Christian, can you comment a bit on the product launches across both the regions? What is the plan going forward now in terms of SUV launches both in Brazil and the U.S. please? And if you could also please comment maybe on the Audi inventories in North America what's the plan there to be reduced? Second question please Frank. Just if you could please maybe comment on the product cost line and the acceleration of those cost savings. Do you have any examples behind that figure? And if you could please also comment on the if possible -- consensus seems to be roughly maybe €17.5 billion EBIT for the year, if you are broadly comfortable with that level please. Thank you.

Okay. Jose, I take that as four questions. But we'll kick off I guess with the North America and the South America part.

Yes. Jose, thank you. Maybe I'll start with the product side. And instead of now going maybe to all product launches we'll certainly come back to you and give you specifics. But just to hit a few highlights obviously starting with South America, we have the launch of the Macan obviously a halo market. And then in -- most major models in the Volkswagen and Audi brands are already launched, so we're now getting the full benefit of these new models coming in. A few highlights and then the biggest one is probably in Q2 you will see the T-Cross being launched in Brazil, which you know is an A0 SUV extremely successful in Europe. We believe it's a great path for South America and in particular for Brazil. On the inventory side to start with North America very briefly as Frank has already alluded to yes, we're slightly above ideal stock, but this is to a certain extent a conscious decision, because as you know due to uncertainties on tariffs, North America we have decided especially for the Porsche and the Audi brands to build up higher stock to be prepared for potential higher tariffs which of course we do not hope for, but we want to be prepared. So obviously, we will sell off the stock once the cloud is clear.

Yes. Just start with the easiest one. I think you mentioned Jose €17.5 billion total EBIT for the group and what I would be comfortable with. It is a number which perfectly well fits into the corridor, which I was confirming earlier this afternoon 6.5% to 7.5% would have that number somewhere in the middle. We certainly appreciate the strong start into the year. We talked about the exceptional items, which certainly supported the €4.8 billion. But we still have homework to be done, but this is a number which is possible. And everything else is to be trued up throughout the course of the year. Inventories I think Christian covered the overall profit situation in North America and South America for brand Volkswagen. Passenger Car is continuously improving. South America we are not ruling out that already this calendar year, the guys are crossing the line. You know from previous calls that we did a tremendous work on the costs in the entire South American region. And since the volume at least in Brazil is picking up that is supporting the breakeven breakthrough even though just to remind ourselves part of South America is Argentina which is currently in a very difficult state. If I'm recalling the numbers right, I think in March alone sales were down 47% which is obviously brutal on the folks down there. But overall we are on track. North America market is still at an overall high level, but obviously under pressure and which also certainly makes the business case quite difficult. But we are much, much better prepared with the higher share of SUVs. So 2020 continues to be the breakeven year for Volkswagen Passenger Cars in North America. You also might remember North America part of it is Mexico. We're quite aggressively priced over there, lost some volume but we balanced successfully. So 2020 for North America, 2019 for South America. On product costs obviously we had to offset quite a bit of headwind on raw material prices quite a bit of volatility in steel prices. In particular we expect in all 2019 to be under pressure. We have some hedging in place. But obviously we have rolling contracts and therefore uncertainties related to the raw material prices will prevail. But for the full year I think we expect a positive number on the product cost side, even though it will be a number where not the sky is the limit. It will be more to the bottom than to the sky due to those circumstances, but product costs continue to be an area of focus. I hope that we addressed the four pieces of José's questions. If not we hope you'll come back.

Okay, thank you. Thank you José. And I believe Horst is back in the line. So operator if we could move to Horst please?

Mr. Schneider your line is now open.

And I hope you can hear me. The phone was muted. My questions please. Coming back to José's questions on the consensus suspected fee on the full year margin expectation you made this 8.1% margin now in Q1. Is it right to -- is it fair to say that H2 margin going to be below H1 also due to this inventory reductions that you plan probably for H2? And then on the foreign exchanges can we just multiply the Q1 positive impact times four, if the currency rates remain unchanged versus today? Or is there something special that the run rate should turn negative again later on? And maybe you can reiterate your cash outflow related to these special items if that has changed by the additional one-off that you have booked now in Q1. The last question that I have is on model launches. Getting more comments that the Golf and the ID launch might be delayed since you have got problems with your software architecture, would you confirm that? Or would you say from today's perspective all is on track for an on-time launch and also there's nice volume ramp-ups?

Okay. Horst good that you came back in with your long list of questions there. So just...

Sorry again yes.

Just to make sure we got them all. I think you're asking about Q2 and H2 effects and whether we can multiply that by 4. Cash outflow in 2019 for diesel and then you came back with model launches just at the end there. So we'll move to Frank for the first part.

Yes. Horst, yes let's start with foreign exchange. Yes I wish that we for the full year just could take the Q1 number and multiply it by 4. At the very moment obviously subject to revision, we assume a substantial negative number for the full year from the foreign exchange side. But this is the very best we currently assume, but this is to be trued up throughout the course of the year, but for the full year a negative part on the EBIT bridge resulting from FX. Yes, coming to the margins. I think coming back to Q1, 8.1%. If you take the €500 million out, we are pretty much on par with the margin for Q1 in 2018, 7.2%, 7.3%. Q2 was particularly strong in 2018 with more than 9% almost €5.6 billion. That was exceptional. And as we reviewed 2018 there was probably some pulling forward due to the volatility from WLTP in particular in the whole calendar year. We are not pessimistic about Q2, but realistic. So if you force me to give you guidance today, I think it should be a margin number which should be a bit below the 9.1% from last year. But I think if I look at the total quarter, I'm not going to lose my sleep over the expected financial outcome in Q2. I think Christian is probably best prepared to talk about the launch and how eagerly he's awaiting Golf eight and the ID family.

Frank very eagerly. Two fantastic cars to come. First maybe let me start with the ID. I mean obviously as announced we will start pre-booking on May 8. So maybe that gives you some confidence some sign that we're ready to launch the car on time and with the targeted volumes ahead of next year. As you're of course aware we're refitting a full factory. So of course no new car launch especially this will not be a walk in the park, but we're very confident that this car is on track. The same is true for the Golf which we will show this year and then also announced the start of production beginning of next year. So I'm sure you will see a wonderful car and maybe take these discussions. I mean both models will be a sign of a fundamentally new generation of cars being fully connected and much more of an integrated device on top of being wonderful cars. So I think maybe it's even worth a slight delay. But again we're fully on track for both cars at this point in time.

But start of production is just beginning of next year there's, no 2019 impact on that right?

Sorry. So the homologation started production this year, but the ID. will be shown in Frankfurt and then we'll do the SOP for the Golf this year as announced.

And I still owe you obviously the answer on payouts related to diesel. I hate paying out money for diesel. But since we caused that mess, it's certainly what we have to pay for. For calendar year 2019, it should be a number in the range of €2.4 billion and a little lower, but pretty much in the ballpark for '20. This is our current best estimate. And maybe just to add because I know that you do the math by yourself regarding quarter-over-quarter comparisons, but in the second quarter, I think I gave you the general flavor how we foresee Q2. But the launch activities are certainly something which is going to leave its mark. You know that we will have in absolute terms higher R&D expenditure for the full year which is going to impact each and every quarter from a cash and also P&L impact. And the rest WLTP and FX risks, we talked already about as a general placeholder and item, but this is basically the background of which we make the forecast and assumptions.

Thank you.

Okay. The time is moving on, lets take the next question please.

We have the question now from Angus Tweedie from Citi. Please go ahead.

Thanks for taking the question. It was just a clarification on homologation because I think in your remarks you said that Audi had now sort of finished Stage one of WLTP, but I think you're also guiding to some volume weakness in the second quarter. Perhaps if you could discuss that and also reference Porsche in that that would be helpful? And then the second one would just be, if you could give us a bridge on diesel at the moment in terms of where we stand in regard to provisions and contingent liabilities? That would be helpful. Thank you.

Angus allow me to start with your WLTP question. Again I think for clarification, we have to differentiate between what is available at the beginning of 2019 as an aftermath of the transition in September, 2018. So there as we said still some slight impact for both Porsche and Audi in Q1. We don't expect any major impacts in Q2 for that matter. So virtually all models are available from 2018 onwards. Then, of course, we go to the second stage of WLTP starting September 2019. And as Frank has indicated earlier, of course, this will be again a challenge but we expect a much weaker or much less impact than last year. So yes we might also see some slight deviations on model availability, but again significantly less impact than last year. Impossible this time to hand and give you a very specific number but we expect virtually to be in the solid level of availability to satisfy all our key customer demands.

Sorry, just on the second quarter, because I mean the impression I got was that the volumes will be softer by brands. Is that just down to product launch? Or is there anything else?

Well, I'd say the aftermath of the WLTP changeover some models that have not been available due to last year's changeover at least virtually all of them are now available. You will still -- you have, of course, some model changeovers as I mentioned the 911 and others, which have nothing to do with necessarily WLTP.

Good. Then I move on to the diesel bridge. But maybe by wrapping up the questions you had Angus on Audi and Porsche a bit from the financial perspective, we know that both brands would have similar pattern in terms of volume, but also in terms of profitability first half, second half. It has pretty much to do with the arguments and reasons Christian was referring to, timing of model launches WLTP. We shouldn't forget on the Audi side there's a lot of fleet business. Audi definitely will be much better prepared given the WLTP schedule, Christian was elaborating on. From now onwards to participate in the business more than 50% of the total market in EU5 countries is fleet business. We should always keep that in mind. So that should help. And we guided you guys earlier that for Audi, we have seen new margin guidance of 9% to 11% in place due to the recalibration after the elimination of multi-brand imported companies that we would miss that corridor in 2019. 7% to 8.5% is the current guidance in place and this is what the guys are fighting for. Audi as much as the other brands have tough cost cutting programs to be finalized with the social partners. I refer to the third shift cancellation, which already took place but there's way more to come. And Bram and his team are quite confident to get there. In terms of diesel, yeah total diesel clock so to speak is hitting up to almost €30 billion. We provisioned at this point of time for diesel, but all other known risks to the fullest extent possible. So all known risks including all diesel related risks are fully provisioned for. In terms of contingent liabilities, we look at contingent liabilities of around about currently €5.5 billion of which investor lawsuits related due €3.4 billion.

Thank you very much.

Okay. Let’s move onto the next question please.

Thank you. We have a question now from Jürgen Pieper from Metzler Capital Market. Please go ahead. Jürgen Pieper: It's Jürgen from Metzler. I have two quickies on Porsche. First one is the Q1, would you define or -- would you describe Q1 as a trough quarter for Porsche this year? And to what extent 50%, 60%, 70% has to do with the 911 change? And specifically on China you mentioned that in China, Porsche sales were down in the first quarter while the other German premium brands did still well in China even in this tough environment. So they were all up in the first quarter. So do you see any reason why there's some hesitation concerning Porsche on the customer side in China? Or is it again I mean it can be the 911, I believe because it plays in a role in China. So where do you see the reason there? Thanks.

Okay. Jürgen your question was Q1 a trough, a low point for 911 -- sorry for Porsche for this year. And then for Porsche in China, the sales seemed a little bit weak in your regard in the first quarter.

I mean, there are a lot of people out there who would love to have the low point at 15.9% of hedging margin. It's a nice problem to have. I think you know that 15% is a minimum. We were used to have a higher number for the full year. And as always I'm pretty confident that our colleagues throughout the course of the year will strive for the highest number possible. So I continue to have quite a bit of comfort and optimism that we can improve. But we knew exactly what we assumed that Q1 was -- given from where Porsche is coming from that this would be a little weaker. But no reason to panic. And I know how reliable internally the forecast of our colleagues from Stuttgart are. So model changeover is definitely part of the occasion, which also explains the China situation. I think we recognized in some markets in China that people were holding back due to the VAT reduction effective April 1st. But we continue to be optimistic that Porsche is going to be successful in China. And I don't know looking over to Christian, he's shaking his head. So he seems to fully agree with what I was saying some model changeover on Macan. And overall the luxury segment in China is still actually doing overall better than the volume segments in the market. So for the full year we continue to believe that our current forecast is valid for China in particular. Jürgen Pieper: Great. Thank you.

Okay. Thank you, Frank. Keep in mind the clock. We’ll move onto the next question please.

Thank you. Our next question now is from Daniel Schwarz from Credit Suisse. Please go ahead.

Yes. Thank you for taking my question. I have two. The first is another one on asset sales. When you decide for or against an asset sale or an IPO what is that mainly based on? Is it a valuation multiple relative to peers like Volvo or relative to Volkswagen Group or relative to an absolute value for example the book value? And the other question is more a clarification regarding your comments on China. Wholesale overall seems to be coming in very weak in April. Do I understand your comment right, retail sales is much better than that and it's potentially up year-over-year in April? And do you assume incremental government incentives as part of your guidance for a flat market for China?

We don't have yet the final numbers on the volume side for China. But I personally expect the retail number to be down for April year-over-year. But the final numbers are not yet available to us. So that's my personal guesstimate for the month. Any effect we expected to potentially come over time. I think one month alone is certainly not painting the full picture. We just had a Board meeting basically during the Shanghai motor show locally with the folks. There are a lot of people who believe including our Chinese joint venture partner that the measures taken by the government do potentially support the second half of the year. But when we did our overall planning for the year, we didn't build our sales forecast on substantial government incentives being available. And your first part of the question Daniel, I would differentiate between asset sales and IPO even though they are certainly similar. But for an IPO, what I was trying to relate to earlier there are different multiples, there are different evaluations at times. And if you look for an extended period how truck and bus OEMs and Volvo probably would be one of those in the basket you compare yourself with in a normalize period what would your asset be worth in a normalized end-market environment and this is what I would derive my fair value definition from. Yes? Asset sales obviously there are a strategic aspect, why would you consider an asset sale. I think from previous discussions you might remember, given the tremendous transformation of our company but the entire industry is going through I think it's essential to have a clear view on what's core what's non-core. It's about what can you support in the years to come? What can you continue to invest into? That is one element in reducing complexity. Particularly for a group like ours it's another dimension which we deem to be important when you review your asset portfolio as we confirmed to be still interested in in our group initiative number13. And those discussions will continue. IPO is delayed but not off the table. And other asset reviews are continuing. And we will comment on them once decisions are being made. And we will not support speculation at this point of time. But this is a position we are having as a Board of Management.

Okay. Thank you.

Thank you. Let's move on to the next question please?

Thank you. We have a question now from Adam Hull from MainFirst. Please go ahead.

Hi good afternoon. Adam Hull, MainFirst. Good afternoon. Two questions really. First one, on gross margins on your MEB platform, I think it's becoming increasingly an important part of the story here. Could you confirm that you're assuming say positive gross margins in 2020? Maybe give us some indications of what the difference between the gross margin sales of VW brand and the mass market for MEB cars in your thinking versus other cars. I mean is it 10, is it 15 percentage points lower? Just give us some sort of feel. And should we be thinking that 2020 is the low point on the gross margins in your planning, and then it gets better as volumes pick up and battery prices come down? And then secondly, on FX, just wanted to be clear, so far your assumptions are unchanged on where you were at the beginning of the year. And therefore you're sticking to a significant negative year-on-year on your profit bridge on FX. Is that the right way to think about it? Thanks.

Yeah. Adam unfortunately, that it is. That's still our assumption for the full calendar year. And obviously we will true that assumption up quarter-by-quarter. But for the very moment, we assume for the full year FX to be negative. We continue to be positive for the full year on volume mix and pricing. Also obvious we have wage increases to digest product cost hopefully positive. And fixed costs are going to increase. On the -- also on the positive side again Commercial Vehicles. And I also count on my former colleagues from Financial Services in Brunswick to help us out in the calendar year in a year-over-year comparison. So these are the drivers for the EBIT bridge as we see them, yeah, the MEB, the electrification, I think you picked up entirely on what's happening. MEB-based product is making inroads. What was in the last couple of years holding back electric vehicles from being profitable? Obviously, very small volume and extremely high battery cell prices. Within new volume MEB-based electric vehicles coming to market in 2020 for us we improved significantly on both elements. The I.D. family means and its derivatives for Volkswagen and the other volume brands we will significantly increase volume and we make significant progress on battery cell prices. But on the other hand, this is certainly an element which is impacted by supply and demand as well as certain raw material prices which we all know are fluctuating. So the next couple of years, the inroad of electric vehicles are going to put substantial pressure on our group overall margin. And we promised and this is basically embedded in our forecast for the Group as much as for the relevant brands. We are basically embedded in our forecast that we find offsets and even more than offset those MEB and PPA-based products coming in later and that we still deliver substantial value for our shareholders. This is a balancing act. This is a commitment. And that's what the respective programs are all about. I think we made it hopefully abundantly clear that it is not a walk in the park. But we believe that the Volkswagen Group with its number of distinctive brands was our positioning in the most relevant segments and most relevant regions in the world plus dedicated platforms like MEB and PPE are probably quite well-positioned in order to be successful in this transition. We have a plan and we executed rigorously. Certainly, it's all depending at the end of the very day of the customers buying those product, but if -- I grew confident in the last two years then it is in the product. I mean, I'm not a car guy by education and training, but I looked at those cars two, three years ago some of that stuff only being clay models. And if I see now they're ready for production cars. Those IDs and expect respective products from the other volume brands will convince a lot of people not everybody from the get-go. But the product in terms of interior, exterior handling, range, pricing will convince a lot of people certainly, not all people at the same time. But we are fully convinced that the product will make an inroad. And the volume expectation we are having don't seem to be unrealistic. And we built our plans on the assumption that we can sell those cars orderly without incentivizing too strongly and pushing cars, which are not desired into the marketplace. That's what we build on.

Can I just ask, I mean, you mentioned in terms of the guidance and the target you already set I mean, I'm assuming -- the key guidance being the 6% EBIT margin at least €2 billion free cash flow at VW Passenger Cars in 2022 as being a key, sort of, marker in the sand on electric cars and then possibly MEB. I mean, will we get more details on the breakdown for that in a Capital Markets Day say in June or July or so? Is that what we can hope for? Thanks.

I mean, we currently -- we definitely don't intend to give profitability numbers by car line also very much so driven by -- for competitive reasons. But we certainly will continue to update you on the progress we are making towards to the 6%, which would be quite a milestone. If we remember where we are coming from it was 1.8% in 2016, obviously being a very low number for the brand. And the 6% is not hopefully the endgame. But given the balancing act we have been talking about quite an improvement and the next milestone to get to.

Thank you.

Thank you very much. Let’s move on to our last question, please.

Certainly. Our last question now today comes from Michael Punzet from DZ Bank.

Yes. Michael Punzet. Good afternoon. I have one question related to the additional €1 billion provisions related to Dieselgate. Is it only related to higher lawyer cost and so on? Or have you already included some provisions for possible times or possible compensation payments for your clients?

No, Michael as I indicated earlier, it is in the very best interest of the company and its owners if I'm not much more specific. Increased cost for lawyers and legal proceedings is included. But please trust me on it that every more detail is not in the interest since the relevant proceedings are ongoing and I don't want to put the company in risk and add more risk. So please stick with us up to the very moment when we are able to shed more light on the other elements other than cost increases for legal cases and claims. There are obviously also more customers coming up with claims and that is also part of it. But other legal proceedings are certainly making up for the difference.

Okay.

Okay. Thank you everybody. That closes our Q1 conference call here from Wolfsburg. Thank you and goodbye.

Thank you. This will conclude today's conference call. Thank you for your participation ladies and gentlemen. You may now disconnect.