Daimler Truck Holding AG

XETRA:DTG

Q3-2025 Earnings Call

[Marcus Poppe, executive]

Good morning, ladies and gentlemen. This is Markus Poppe speaking. On behalf of Daimler Truck, I would like to welcome you on both telephone and the Internet to our Q3 results global conference call.

We are very happy to have with us today, Eva Scherer, our CFO. Eva will begin with an introduction directly followed by a Q&A session.

The respective presentation can be found on the Daimler Truck IR website. On our request, this conference call will be recorded. The replay of the conference call will also be available as an on-demand audio webcast in the Investor Relations section of the Daimler Truck website.

I would like to remind you that this teleconference is governed by the safe harbor wording you will find on our published results documents. Please note, our presentation contains forward-looking statements that reflect management's current views with respect to future events. Such statements are subject to many risks and uncertainties. If the assumptions underlying any of these statements prove incorrect, then actual results may be materially different from those expressed or implied by such statements. Forward-looking statements speak only to the date on which they are made.

Now I would like to hand over to Eva.

[Eva Scherer, executive]

Thank you, Markus, and good morning, everyone, and thank you for joining our earnings call for the third quarter of 2025. As the results show, quarter 3 was shaped by a sharp downturn in North America and a slow paced recovery across European markets.

Industrial business revenue totaled EUR 10.6 billion, driven by 98,000 units sold. Adjusted group EBIT totaled EUR 716 million.

Adjusted return on sales for the Industrial business came in at 6.3% with earnings per share at EUR 0.57.

Free cash flow was EUR 24 million, bringing our net industrial liquidity to EUR 5.9 billion at quarter end. In a volatile global environment, we are focused on what we can control, improving structural efficiency through disciplined cost management and targeted resource allocation to have the best value proposition to our customers.

At our Capital Market Day in July, we outlined our path to becoming a more resilient and profitable company, and we are executing on this.

Product highlights in quarter 3 include the launch of the eActros 400 and the new BharatBenz HX series. The eActros 400 is part of a large electric truck portfolio extension based on the technology of our eActros 600 and further strengthens our market leadership in electric trucks.

We call it the second generation of our eActros. It offers more than 40 possible combinations of the basic vehicle, depending on the application and requirements for range, payload and comfort. The new BharatBenz HX series is tailored to meet specific needs in India's growing construction and mining segment even better, offering significant improvements in operational efficiency.

Another highlight is our new cooperation with ARQUUS, which aims to develop products and processes to better meet the needs of customers in the defense sector with Mercedes-Benz providing the trusted Zetros and thereby contributing to the future modernization of the French Army's logistics truck fleet.

Furthermore, we have signed an agreement with Otokar, which adds cost-effective manufacturing capacity to meet strong demand for the Mercedes-Benz Conecto city bus, further strengthening Daimler Bus' market position.

Let me now turn to the developments in our key markets in the third quarter. In North America, the Class 8 market totaled 200,000 units for the first 9 months, representing a 12% decline year-over-year. In the third quarter, the decline accelerated to minus 20% year-over-year. The drop reflects ongoing economic uncertainty and a weak U.S. freight market.

Our Class 8 market share held steady at 40% through September, confirming our leadership position.

In Mexico, the heavy-duty market declined 45% year-over-year. This was driven by the Euro 6 transition early in the year, compounded by economic weakness in quarter 3. In Europe, the heavy-duty market declined 8% year-to-date, totaling 217,000 units.

On the positive side, however, the third quarter saw 6% year-over-year recovery. Our European heavy-duty market share rose to 16.5% year-to-date and 19.1% in quarter 3. This represents an increase from 16.2% in quarter 2 and 14.2% in quarter 1.

We have steadily improved our position, supported by strong demand for the Actros L. This confirms that our product investments are paying off.

Let's take a closer look at unit sales and order intake in the third quarter. At group level, the book-to-bill ratio was 96%. Unit sales fell 15% to 98,000 units, while incoming orders declined by less than 1% year-over-year to 93,900 units.

At Trucks North America, unit sales dropped 39% and incoming orders 29%, reflecting the sharp contraction in the U.S. market. Considering tariff uncertainties, our effort to accelerate deliveries in quarter 2 ahead of potential tariff changes amplified the sequential decline in unit sales.

On a positive note, our current order backlog covers the 2025 unit sales guidance.

At Mercedes-Benz Trucks, stronger order intake is now converting into higher unit sales, up 8% year-over-year in quarter 3.

Volumes rose compared to the third quarter, but were lower than planned due to continued ramp-up issues in our plant in Wörth, Germany as well as a more muted market environment in India and Brazil.

Despite tariff uncertainty and a slow paced recovery in Europe, EU30 orders rose by 56% for Mercedes-Benz vehicles with strong demand for our Actros L, leading to a book-to-bill ratio of 102% in Europe. Orders in Germany improved slightly by 5% for Mercedes-Benz vehicles.

Latin America unit sales rose by 10%, a 6% decline in Brazil due to a weaker heavy-duty market, high interest rates, inflation and political uncertainty was offset by stronger sales in Argentina and market share gains in the medium-duty segment in Brazil.

Order intake for Latin America increased by 6%. In India, unit sales rose slightly despite a market shift towards the 16 to 19 tonne segment, where we have a lower presence and quarter 4 sales pushout due to the VAT reduction, which became effective on September 22, 2025.

Trucks Asia delivered around 26,000 units in the third quarter, an 8% decrease year-over-year. This decline was driven by weaker sales in Indonesia. Order intake rose 12% year-over-year, mainly attributable to growth in Japan and Indonesia.

Daimler buses unit sales fell 4% year-over-year, mainly due to a weak Mexican market. Order intake was down 12%, driven by softer demand from Brazil.

Let's look at our ZEV volumes. In the first 9 months of 2025, we sold over 3,800 battery electric trucks and buses, up from 2,100 units in the same period last year. Order intake for zero-emission vehicles remained flat at around 4,200 units.

Our zero-emission vehicle data highlights that the transition to zero emissions depends not just on the right vehicles, but also on achieving cost parity with diesel and a robust charging infrastructure, areas where stronger government support is still needed.

The transition has faced headwinds in both the U.S. and Europe. Adoption in the U.S. has slowed significantly and progress in Europe remains below expectations. On a positive note, our zero-emission vehicle range continues to resonate with our customers, achieving a 56% share of the European heavy-duty market in September and bringing our year-to-date market share to 33%, making us the market leader in electric trucks.

Now let's have a look at our financial performance for the quarter. At group level, revenue declined 13% year-over-year to EUR 11.5 billion and adjusted EBIT fell 40% to EUR 716 million.

From a segment perspective, Mercedes-Benz Trucks and Financial Services contributed positively, while Daimler Buses and Trucks Asia saw modest year-over-year declines. Trucks North America profitability dropped over 60%, driving a 42% year-over-year decline in the Industrial business EBIT to EUR 668 million in quarter 3.

Trucks North America revenue declined 33% year-over-year to slightly below EUR 4 million -- to slightly below EUR 4 billion leading to an adjusted EBIT of EUR 257 million and an adjusted return on sales of 6.4%.

In addition to lower fixed cost absorption, the profitability was affected by higher R&D spending and expenses related to capacity adjustments. The tariff impact was in a double-digit million range in the third quarter. Pricing remained positive in quarter 3.

However, the product mix generated a headwind with fewer Cascadia and Western Star vocational trucks and a higher medium-duty share with lower captive powertrain penetration. Following significant production adjustment, our dealer inventory was reduced by approximately 15% in the third quarter, in line with the overall industry decline.

This normalized inventory will benefit us once the market rebounds. Mercedes-Benz Trucks revenue rose 3% year-over-year to almost EUR 4.9 billion with an adjusted return on sales of 6.5% and adjusted EBIT of EUR 319 million.

While a significant improvement was anticipated in the third quarter, stronger-than-expected demand for the Actros ProCabin, combined with ongoing supply chain constraints have continued to limit our production volumes.

In EMEA, profitability improved on higher volumes, a favorable mix and a release of previously accrued bonus provisions, partially offset by increased R&D spend and selective pricing measures.

As expected, in a competitive European market, we remained focused on executing the cost reduction initiatives that we outlined at our Capital Market Day in July. In Latin America, business was impacted by a 7% market decline in Brazil, driven by a significant drop in the extra heavy on-road segment and a mix shift towards medium-duty vehicles with lower contribution margins.

Volumes in India rose slightly year-over-year. Looking ahead, we expect demand to pick up following the implementation of a more favorable tax rate as many customers had delayed purchases in anticipation.

Trucks Asia reported an adjusted EBIT of EUR 67 million in quarter 3 with an adjusted return on sales of 5.7% on revenues of almost EUR 1.2 billion.

The market environment in Asia remains challenging with persistently low demand in key markets such as Japan and Indonesia. Despite weaker volumes and unfavorable regional mix and FX headwinds, the segment delivered a solid performance by maintaining strong prices and exercising SG&A cost discipline.

While we expect stronger new vehicle unit sales in the fourth quarter, Trucks Asia's profitability will be impacted by increased headwinds from FX and significant seasonal increase in R&D expenditure.

Daimler Buses delivered another strong quarter, reporting an adjusted EBIT of EUR 137 million and revenues of over EUR 1.4 billion, resulting in an adjusted return on sales of 9.8%. The segment maintained its market leadership across its core markets, including EU30, Brazil and Mexico.

Adjusted EBIT was slightly lower year-over-year as quarter 3 2024 included a EUR 26 million gain from the measurement and sale of a noncore shareholding -- EUR 26 million gain from the remeasurement and sale of a noncore shareholding.

Quarter 3 performance was supported by a favorable mix and strong net pricing. Adjusted EBIT for Financial Services rose year-over-year from EUR 39 million to EUR 48 million. The improvement was resulting from stronger portfolio margins and lower SG&A. These gains more than offset FX headwinds and elevated cost of risk, which remain driven by the ongoing freight recession and macroeconomic uncertainty in North America. As a result, adjusted return on equity increased from 5.7% to 6.5% in the third quarter.

Now let's look at our quarter 3 cash performance. Working capital had a negative impact of EUR 121 million, driven by higher inventories at Mercedes-Benz due to ramp-up challenges in our German assembly plant, initial stocking at the new Halberstadt distribution center and the after effects on the North American production network following the fire at our Cleveland plant.

Net investments in property, plant and equipment and intangible assets totaled EUR 415 million.

As a result, cash flow before interest and taxes for the Industrial business was EUR 202 million. After deducting EUR 156 million in cash taxes plus interest, pension contributions and other items, free cash flow for the Industrial business came in at EUR 24 million.

On an adjusted basis, free cash flow was EUR 116 million. Net industrial liquidity was at EUR 5.9 billion at quarter end, unchanged from quarter 2.

As in previous years, we expect cash generation to be concentrated in the fourth quarter. Let's turn to the key drivers for the remainder of 2025.

Our guidance for the 2 major regions remains unchanged. We continue to expect the North American heavy-duty truck market to land between 250,000 and 280,000 units and the EU30 market between 270,000 and 310,000 units.

All segment level guidance KPIs for 2025 remain unchanged. Since November 1, we've been operating under a new tariff environment. Some specifics remain unsolved and a full evaluation of the implications will require more time.

For Trucks North America, we remain confident in our ability to mitigate the impact of additional tariff costs for 2025 and expect to land at the lower end of both the 2025 unit sales range of 135,000 to 155,000 units and the return on sales corridor of 10% to 12%.

In the fourth quarter, we expect Trucks North America unit sales roughly in line with third quarter levels, but profitability to be sequentially weaker due to an ongoing unfavorable mix, a fading pricing tailwind, increased tariff costs and seasonally higher R&D and SG&A expenses.

Full year profitability for Mercedes-Benz Trucks is expected to land at the midpoint of the 5% to 7% guidance range. We expect quarter 4 unit sales for Mercedes-Benz Trucks to be approximately 20% higher than quarter 3, contingent on timely resolution of current supplier challenges.

Quarter 4 profitability is expected on quarter 3 level. Trucks Asia profitability in quarter 4 is anticipated to be lower than in the third quarter due to further FX headwinds and seasonality in R&D expenditure despite higher quarter-over-quarter unit sales.

Daimler Buses is expected to deliver a significant sequential increase in unit sales in quarter 4, with profitability slightly above quarter 3 levels.

For Financial Services, we expect adjusted EBIT in the fourth quarter to be on a similar level as in the third quarter.

We confirm our group and Industrial business guidance. Given the heightened uncertainty stemming from the tariff situation in the U.S., we have not yet started our recently announced share buyback. We intend to start the buyback program once we have better visibility, and we remain highly committed to a shareholder-friendly capital allocation policy. As you can see, numerous dynamics are currently at play, many of which are externally driven. That's why we are focused on what lies within our control, enhancing efficiency and delivering value to our customers.

Our first -- our results for the first 9 months show that we are on the right track.

That concludes our presentation. Thank you for participating. We are now happy to take your questions.

[Marcus Poppe, executive]

Thank you very much, Eva. Ladies and gentlemen, you may ask your questions now. [Operator Instructions]

[Operator]

The first question comes from Nicolai Kempf from Deutsche Bank.

[Nicolai Kempf, analyst]

It's Nicolai from Deutsche Bank. Two questions and both related to North America. First one, you probably saw the Class 8 order intake for October and pointing into the right direction.

And as you stated, due to the production cuts last month, inventories are coming down. So do you see a bottoming out of this market? And the second one is on tariffs, and I will refrain from asking for a specific number. But just high-level thinking here, are you considering to adjust your final assembly given the tariffs, so moving more assembly to the U.S.?

[Eva Scherer, executive]

Nicolai, thank you for your questions. Two very valid ones. So let me take the first one. So order intake, and maybe let me start also a bit with how the Q3 orders developed over the months in the quarter.

So July, August were on a fairly similar level, but then September was quite a bit better than that. And October was then also a bit better than September sequentially. So we do see a positive trend continuing. I mean I have to say it's in a very low market environment that we're operating right now, but we do see that it's slowly picking up.

And I also did say during my speech that, that obviously also leads to the fact that our inventories are coming down because we have adjusted our production program now throughout the last couple of months.

So we do see that in dealer inventories. What we see, as I said, 15% that's what came -- that's how it came down over the course of the quarter.

Within that, we see that there was about a 20% reduction on the on-highway side and then 15% roughly on the vocational side. So on the on-highway side, we actually see even a higher reduction in dealer inventories, and that's now a fairly normalized situation.

So we're getting out of these high levels. And on the vocational side, it's also pretty normal that it takes a bit longer to reduce further because we obviously are relying there on body builder capacity, which has gotten better, but there's still a small congestion that we see there.

And also, our own vehicle stock has decreased as a result of the reduction of our production program where we now are in a normalized environment. And we are from a production program because of the order development in quarter 3, now fully booked with our planned production program for quarter 4, and we are now filling quarter 1, which is obviously not filled yet, and we have some work to do there.

Now let's come to your second question, the tariff implication. And of course, we're talking here about the implication of 232 that has been implemented as of November 1.

We have said before that we have a fairly high level of flexibility among our assembly plants in the U.S. and in Mexico. But I cannot tell you at this point whether we will be making any adjustments and if how we would make them because as I also said during my presentation, we need to understand the details of the new tariff scheme a bit better.

So what we obviously know is that we're paying the 25% now as of November 1 for the assembled trucks when we bring them across the border from Mexico into the U.S. and we only pay for the value of the assembled truck minus the U.S. content. So that is the situation right now.

But then there are obviously a lot of details within that when it comes to deductions and credits. So when it comes, for example, to a 3.75% credit on the selling price of trucks assembled in the U.S., and there are a couple of questions we are still having.

So we are obviously in close discussions with the U.S. administration in order to understand that better and also to, of course, discuss mitigation measures. And as part of mitigation measures, we will always look at how we utilize our flexible production network.

And of course, we also look for further efficiencies on our side and how we can deal with that situation. But it's really a bit early to tell because it's going to take us some more time to understand how it all comes together and what the final implication will be.

We have worked for quarter 4 now with an assumption of what we believe the impact will be. And as I said during my presentation, we are confident that we will be able to compensate the quarter 4 impact within our guidance.

[Operator]

The next question comes from Klas Bergelind from Citi.

[Klas Bergelind, analyst]

Eva, Klas from Citi. So just coming back on the tariff comment that you expect to be able to offset the effect with countermeasures during the outlook period. But obviously, the implied margin for Trucks North America into the fourth quarter is now around low single digits.

So effectively, are you saying that within the guidance? Because obviously, in absolute terms, your tariff impact from November and December must be sort of 5% to 6% on my math. If I understand that better, Eva, I will start there.

[Eva Scherer, executive]

Klas, thanks for the question. We're having a bit of a bad connection. The last part, I didn't quite understand the -- in absolute terms part about the tariff impact. What was that?

[Klas Bergelind, analyst]

Yes. So what I meant is -- I hope this works now. What I meant is to get to a low single-digit margin for Trucks North America implied by your low end at 10%, so low single digit for the fourth quarter margin, that would imply that you have a quite big tariff impact that you can't compensate for. I hope you can hear me.

[Eva Scherer, executive]

Yes. So I mean, of course, in the quarter 4 guidance, the tariff impact is implied. And we have now -- and we talked about this, I think, in previous quarters, we have a tariff surcharge that we're currently using.

We do not intend to increase this in the course of quarter 4. So that means the impact from the surcharge is as per our previous planning for quarter 4, but now we have higher tariff costs coming in. So of course, the net impact is bigger.

I said before that we expect net tariff impact for this year in a low triple-digit million amount, which is mostly reflected in the second half of the year with the highest impact in the quarter 4.

And this is excluding EUR 232 million and then EUR 232 million comes on top now. And yes, this will be a tariff impact now without mitigation, obviously, in quarter 4 because we have just 2 months there.

And then, of course, now we're, as I said, working on understanding it all better and see how we will react to it and looking at production footprint and of course, also looking at like what do we produce in the U.S., what do we produce in Mexico, how we can navigate that in the best possible way going forward with the stipulations that we have now in the new regulation.

[Klas Bergelind, analyst]

My second one, and I hope you can hear me, is on the guidance for the year. You are reiterating the guidance for the year, but if Mercedes-Benz is 6.5% fourth quarter, Trucks North America, low single digit and Trucks Asia going backwards, I mean the absolute EBIT level, it looks to be at the low end of your guide around EUR 3.6 billion. I just want to sort of understand if you're guiding towards the lower end because that is what I get to.

[Eva Scherer, executive]

Yes. So the profitability, we're towards the lower end for the year. Revenue, you can expect around the midpoint. And then the sales, they're between the midpoint and the lower end, the unit sales, and that's where we expect to be.

[Klas Bergelind, analyst]

Perfect. Absolute final one. On orders in Trucks North America, strong in September, but obviously, the mix is tricky. I think you're alluding to that October was also better than September. Is that -- do you think, Eva, any sort of prebuy ahead of Section 232, November 1? Or yes, what -- how do you understand the order trend?

[Eva Scherer, executive]

No, I do not see a prebuy effect implicating October. What we see is, obviously, October, November, these are the periods when some of our customers are also starting then to really order for the next year and planning their capacities. But we do see that happening much less than in previous years because in the past, we also had capacity constraints on the OEM side, and this is clearly not the situation right now because we're in the longest freight recession that the American market has seen in a long time. It's going on for more than 3 years.

Historically, usually a freight recession ended after about 1.5 years. And so what we see now, obviously, on the OEM side is the capacities are there. So our customers do not really see the necessity to now already order for the next year in a significant manner. So it's still -- again, it was a positive development in quarter 3, much better than quarter 2 sequentially and October is continuing a positive trend, but it's not a spike or anything that would indicate a prebuy.

[Operator]

The next question comes from Michael Aspinall from Jefferies.

[Michael Aspinall, analyst]

Michael from Jefferies here. I'm just wondering if you've had many conversations with customers about how they're thinking about potentially higher prices in the context of your total cost of ownership advantage with the eCascadia?

[Eva Scherer, executive]

Thank you, Michael. I actually had a lot of discussions with our customers during the course of last week because I was at the ATA exhibition and conference in San Diego last week, and we had a lot of discussions.

So what I can say, what our customers are saying is they believe we are the best in the market. That's why they like to buy from us because we have the reliability. They see the total cost of ownership advantage overall to be there because it's also for them not only about fuel efficiency, where we're doing well, but it's about the dealer network where we have the strongest in the United States.

It's about spare parts availability. It's about service quality that our dealer network provides and then, of course, quality of the truck that they can rely on.

And so they're really saying is market has been extremely weak. So they're obviously suffering from this really long freight recession, but they are committed to us. And that is something that became very clear. What we also need to say that, obviously, because of this freight recession and the situation in the market, the ability of price increases at the moment is fairly limited until the market really picks up.

And that's something that we need to take into consideration because we have really demonstrated our pricing power over recent years. And we can see that also in quarter 3, we had a net positive price effect in North America. In quarter 4, that will obviously turn a bit because of tariffs, but generally, a really good price position.

But now when it comes also into the next year, we do hope, of course, that the market will pick up. And I know we said that a year ago also, but it should -- at one point, we should see a turnaround.

But we do not expect to see it at the moment in quarter 1, and it will probably happen more towards the second half of the year. And with the return of the market in the U.S., then, of course, also pricing will be a different situation again.

At the moment, as I said before, when I answered Klas' question, with capacities being there on the OEM side, it's always a bit different. But generally, we believe we are well positioned with the eCascadia and the eCascadia Gen 5, which just came out, which is well received by our customers.

[Michael Aspinall, analyst]

Great. One more for me then, and it won't surprise you that it's on tariffs. There's been some details of the tariffs announced, but whenever I speak to dealers or anyone else, there are always kind of mentions of negotiations.

Are you able to give us any indication as to if you believe the current state of tariffs is the final state of tariffs that will exist kind of -- I mean, I guess as I'm asking, it sounds like a silly question.

[Eva Scherer, executive]

Well, Michael, I didn't bring my crystal ball today. So I'm afraid I don't have an answer. I really wouldn't want to make a prediction on this one right now because I guess nobody knows.

[Michael Aspinall, analyst]

One last one then, can you help us with the U.S. content of trucks you're bringing across from Mexico?

[Eva Scherer, executive]

Yes. I mean we talked about that, of course, before also that we're bringing the full powertrain is coming from Detroit. So that's for sure something that we can deduct from a Mexican assembled truck, and then we also have some other U.S. components and material, and that's how we're looking at it right now.

[Operator]

The next question comes from Shaqeal Kirunda from Morgan Stanley.

[Shaqeal Kirunda, analyst]

Shaqeal from Morgan Stanley. Can you please tell us a bit more about the mood of North America customers? Like we discussed, ACT order data is improving sequentially but remains on low levels.

Are customers more positive than they were 3 months ago? Or is it just seasonality? And then can you remind us on the cancellation policies and delays? Once orders are placed, how easy is it for customers to push those out in case they change their mind?

[Eva Scherer, executive]

Yes. How is the mood? Maybe slightly better. So obviously, one of the questions I asked most last week was when do you think we will see a recovery? And most of them are saying that they hope in the second half of next year, but also acknowledging that we expected that a year ago, the earliest recovery that somebody sees is maybe towards the end of quarter 2.

Quarter 1, I haven't really heard much positivity around. So it's still a wait-and-see mood, and we really need to see freight rates getting to a better level there in order to, I think, really see a changed mood and momentum. So yes, nobody is excited about the market. I can tell you that much. And a lot of players in the market are struggling because of that.

On your question about cancellations, the one thing is how it is -- how is it contractually and how do you then maintain it? And I mean that's also how we managed it this year.

So we have obviously firmly placed orders, but with our large customers, especially in the United States, we also work in the way that they reserve production slots. And then it doesn't make a lot of sense to say you reserve it and now you have to take the trucks because it's about long-term customer relationships that we want to have.

And we are the OEM in the North American market that's has the most mega fleets and large fleets in the customer base. And so the customer relationship is most important for us.

But also when now over the last couple of months, we've seen some cancellations, it wasn't excessive. So I think that's really not the main problem we have that it's cancellations. And it's also not, as I said, that we're getting an excessive amount of orders now for next year because our customers know we have an order cycle of 6 to 8 weeks. So at the moment, the capacity is there, you're getting a truck.

[Shaqeal Kirunda, analyst]

And then can you please tell us about European order trends? I mean I understand we're probably still growing year-on-year, but should we be concerned about sequential declines? And then some of your peers expect the German infrastructure expenditure to kick in by year-end. Do you also see this? And then any update on cost down in Europe, if possible?

[Eva Scherer, executive]

Sure. So yes, European order trend. I mean, in Europe, it's getting better. I mean, I think you saw that with our numbers. Also, we had now a positive book-to-bill also in Europe again, which we're happy about, but it's still not on a really good level.

So we have been waiting for this recovery in Europe also for a long time now. And Germany, yes, I mean, we were already very excited in quarter 1 that now it should hopefully happen also with the governmental announcements of infrastructure spending, defense spending.

We don't see it yet in Germany from what I'm hearing, nobody is. But yes, it should come at one point. And let's hope that in next year and beginning of next year, we see a bit of movement there.

Right now, we don't yet. So we really see Germany order intake with a moderate development, but we really don't see that decisive turnaround yet. And I mean, Europe overall improving slightly sequentially from an order perspective. When I go a bit through the European market, we see a strong order intake in France in quarter 3. So there's higher demand.

Spain is also seeing really, really positive order development. We had an exceptionally strong order intake in Poland in quarter 3 and also in the U.K. So this is where we really saw positive impulses. So it's sequentially better, but not a decisive turnaround at this point.

And then next year, we do hope that we will see a recovery, and we will give you an update then in March when we also give you our outlook for 2026. On cost down Europe, we're progressing well. I mean we gave you, I think, a lot of detail at our Capital Markets Day.

So in all the different areas where we have set our targets, we have now really on a detailed level, defined the measures and the action items, and we're working them through bit by bit. And we are on track to deliver what we said at the Capital Market Day also for 2026, which is a positive impact of a low triple-digit million range for the year. So this is all going as planned, and we're happy with the progress.

[Operator]

The next question comes from Akshat Kacker from JPMorgan.

[Akshat Kacker, analyst]

A couple of them, please. The first one on the Mercedes-Benz Trucks bridge. Could you just explain the factors that are driving all the movements there? Volumes are up on a year-on-year basis. I see gross profit contribution is down. There's another bucket that is up EUR 80 million in the quarter.

You've also talked about some strategic net pricing actions. Could you just help us understand that Q3 margin better? And why are we expecting Q4 margins to be flattish on Q3? That's the first question.

The second one is on CapEx and cash restructuring assumptions as we go into 2026. At the CMD, you've talked about a pickup in CapEx for next year. Could you just give us your updated thoughts on CapEx and cash restructuring for '26, please?

[Eva Scherer, executive]

Sure, Akshat. Thank you for your question. So let's look at the Mercedes-Benz Trucks bridge first. Maybe first, you were talking about this others items, the million. So what we do have there. I mean, these are mainly valuation adjustments for provisions that we have booked there.

But overall, when you look at the moving parts in quarter 3 of Mercedes-Benz Trucks, I mean what we obviously see is that we do have cost effects from these ramp-up challenges in our plant in Wörth, Germany because that comes with a lower efficiency if you have missing parts, you also have some issues with quality from supplier parts and really getting a production process running at an efficient level and you have to do rework.

So that costs you something. And then we have parallel activities in our old spare parts center and then the new spare part center in Halberstadt, Germany, where you have an impact. And so this is something that will also accompany us during the fourth quarter, but we also had that in the third quarter. R&D, we did have an effect, obviously, in quarter 3 of higher spending versus prior year quarter, but we also will see then a seasonally higher quarter 4 spending in R&D, which is something that we also had. And then there was a positive effect in quarter 3, which will not duplicate in quarter 4, which is provision releases.

So as you see, the year is a bit weaker than we planned because markets are not very favorable right now. And that means that also incentive provisions could be released to a certain degree. So we took them down to the current forecast projections. That's something that we will not see duplicating in quarter 4.

So in quarter 4, at Mercedes-Benz Trucks, we have a bit higher volumes, but we do still see some mix effects, and we do see that we have these reworks that will still be affecting our productivity and a higher R&D portion that is then leading to a profitability, which will be on a very similar level in quarter 4 compared to quarter 3.

And then the second part of your question was about CapEx and cash next year. So as I presented also during the Capital Market Day, we are seeing a peak in CapEx expenditure in the next 2 years, and that is still what we believe. And then from a restructuring perspective, we do see next year that we will have -- I mean, this year, it was the consumption of our restructuring provision that we booked in quarter 2 is very, very limited. Next year, that will be a bit more, but we will then update you in our annual results conference as what the premises are for '26 in detail.

[Operator]

The next question comes from Daniela Costa from Goldman Sachs.

[Daniela Costa, analyst]

I have 2 points. The first point is a follow-up on some of the tariff-related debates. But based on what you said, I guess, you're not putting an extra surcharge and you haven't decided on CapEx plans yet.

So as we look into the first half of '26, is there still enough time to do a full compensation? Or should we say that like first half '26 anyways, we should be at sort of materially lower profitability and then compensation will take into effect later?

And also, does that have -- what happens to Section 232 has any bearing on how you think about the buyback cadence?

[Eva Scherer, executive]

Thanks, Daniela, for your question. So no, it's really too early to say what the effect of 232 in the first half of the year will be. And we are obviously -- the first step is now understanding exactly what all the stipulations in the 232 regulation mean.

And again, we're also talking to the U.S. government when it comes to that to understand it better and of course, also talking about mitigation and so on.

Once we know it, then we can talk about our pricing assumption, potential surcharges and so on. I mean I said before that, yes, in a low market, where there is enough capacity also, it's -- there are limits to how much you can do with pricing. But again, we're having that discussion. Once we understood what the impact is, then we will look at potential pricing topics and when we could do something and what the implications would be.

It's really too early to talk about that. I mean what I can say is, yes, I mean, we're not intending to push through potential full 232 effect to our customers. I mean we're also seeing, and I mean, I talked to you about that the net impact of tariffs for this year, excluding 232 is a low triple-digit million effect. That's -- we've obviously passed on a portion of this to our customers and a portion of it you see in our results. So that's the way to think about tariff effects.

And then when it comes to share buyback and implications on explaining CapEx and so on, obviously, we're also -- when we do our budget right now, and we're currently finalizing our budget planning for the next year, it's going to take us another month, 1.5 months or so.

And there, of course, we also look at CapEx and we look at the target there for next year. Whole picture comes together with our market assumptions because volume plays a decisive role, as you can see this year with significantly lower volumes, especially in North America, that will then give us a better overview of where we are on free cash flow generation for next year.

And what I said about the buyback is, obviously, we need to understand what 232 means exactly. And then we will look at the projections for the next year, and then we will decide on the start of the buyback at this point in time because obviously, it doesn't make sense to start the first tranche of a buyback because you have to also define on the value of the first tranche and the speed of the buyback.

And for that, you need some visibility as to how the next couple of quarters are going to look like. And once we know that, obviously, we will update you.

[Daniela Costa, analyst]

And the follow-up just on Mercedes-Benz, both sort of for the European and for Brazil. Like, of course, the deliveries you guided significantly up, but I guess that's because of the supply chain or the trucks you didn't deliver because of supply chain issues.

But if we think about sort of production rates, are you considering them moving forward up, down, flat, sort of what's the production plan, I guess, that's a bit different to what the deliveries path will look?

[Eva Scherer, executive]

Yes. I mean, in Europe, it's not moving up because we do expect to sell off quite a bit of also new vehicle stock in the fourth quarter, which is something that we usually do because we have a shutdown over Christmas of our German plant.

And then, of course, we will also -- we will catch up from that ramp-up issue topic with the supplier parts. And that will then also, of course, also contribute to cash flow with the reduction of raw material and unfinished goods. So that's one portion of the cash contribution we expect in quarter 4.

But then the other one is obviously that we sell new vehicle stock that has built up in Europe because we don't see that development there that we saw in North America that inventories also with our own stock levels are down significantly now.

So that is the movement there, and that's why the production program in quarter 4 is a bit lower for that reason. And in Brazil, it's a bit lower because of market. So we do see a weaker market in Brazil. Overall, we are holding up quite well. We're winning market share, but the market overall, as I said during my speech, is weakening in Brazil.

[Operator]

The next question comes from Harry Martin from Bernstein.

[Harry Martin, analyst]

The first one I have is just on the U.S. competitive position and pricing. I saw that the Class 8 market share went below 40% in Q3. What would you put the main driver of that being down to?

But also PACCAR said into next year, they're looking forward to moving away from surcharge pricing. So does this become a competitive disadvantage for you if you're adding a 232 surcharge and the players with domestic production are not going to be doing that competitively anymore?

[Eva Scherer, executive]

First, Class 8 market share. Thanks, Harry, for your question. So what we see also when we look at now the orders of the last couple of months, we see our Class 8 market share holding steady, which is good.

We did see for a couple of months earlier in the year that ours was a bit weaker, but that was mainly due to mix because, as I said before, we have -- our customers are the mega fleets, the large fleets, and they've been ordering a bit less than the smaller and medium-sized fleets.

So it was a bit customer structure on the on-highway side, but we do not see that we're losing market share in Class 8, and we do believe we are well positioned competitively.

And about tariff surcharges, just to repeat what I said already, it's too early to talk about tariff surcharges for 232 because we first need to understand the impact, and there are a lot of discussions and evaluations happening.

And so that's really not something I can comment on. At this point, we've had a surcharge for 2 quarters now, and this is still there. And everything else we're currently evaluating.

[Harry Martin, analyst]

And then the final question that I have is on next year's outlook. The current consensus has double-digit EBIT growth for 2026. So I wondered how you feel about that? And also what market volume you would need in the U.S. and Europe to be able to hit that level of growth next year?

[Eva Scherer, executive]

Harry, I understand that, that's a very important question to ask, but it's really too early. As I said, we need a couple more weeks to finalize our budget, our market assumptions and all the moving parts before we can comment on the 2026 development.

[Operator]

The next question comes from Alex Jones from Bank of America.

[Alexander Jones, analyst]

Two, if I can. The first, just back on Mercedes-Benz volumes. You talked about your Q4 guidance being contingent on supply chain resolution. Can you give us an update on that and how confident you are that, that does get solved in Q4?

And then perhaps the second question on Torc, I think press reports during the quarter suggested you were seeking a partner for that business. Can you give any comment there and what you would be looking for in a potential partner, whether that's sort of a strategic help to scaling the business or more from a financial perspective?

[Eva Scherer, executive]

Thanks, Alex, for your questions. So let's start with Mercedes-Benz Trucks volume being contingent on solving supply chain issues. So we do have [Audio Gap] in place. We had the last review 2 days ago. And I think there are good chances that we will get that solved during the course of quarter 4.

Of course, it's also always depending on our suppliers. And I mentioned that one reason is also that we have a higher demand for the Actros L with the ProCabin than what we expected and which capacities, then we also reserved for that on the supplier side, which is obviously great that our customers appreciate our new product so much.

And you also see it in the significant market share recoveries over the last couple of months in Europe. So this is really a product that's being well received. And now we obviously need to get the production up and running because we also want to be prepared then, of course, for hopefully better markets also next year.

But again, we have action plans in place, and we're getting through step by step. So that we can figure that out by the end of the quarter, and we're on a good path. I have to put in one disclaimer. It is obviously also dependent on the Nexperia topic not hitting us. I mean that's something that affects everybody in the market. So far, we've been able to manage it quite well.

I think everybody is doing a lot of broker buys, and we're used from the last supply chain crisis and how we can deal with that. And we have also strengthened our supply chain. And at the moment, production is running smoothly.

But obviously, this is also something where we just need to be looking at, and it's a watch item. On your second question, Torc, I mean, I can't comment on media speculations.

What I can say is we are progressing well with our virtual driver software and we do have trucks on the road in Texas, still with a safety driver in, but we are really moving forward step by step, and we've seen good progress over the last couple of quarters. We're hitting our milestones.

And then there are various options for how we will continue with that business, but we do believe we have a great value proposition because we do have Torc as an independent subsidiary that works on the virtual driver.

And then we have in our North American business, the part where we have developed an autonomous-ready Cascadia, so a redundant chassis as we call it. And we also see that this is very competitive product right now where we're ahead when it comes to the technology. And that's something where we believe we are well positioned then once the autonomous market starts and once the technology is ready for a market release, we are well positioned on the vehicle side and on the software side and then having, of course, our customers and the market access that, that will put us in a very favorable position.

[Operator]

The next question comes from Miguel Borrega from BNP Paribas.

[Miguel Nabeiro Ensinas Serra Borrega, analyst]

First one, just on Mercedes-Benz. I wanted to understand how do you see a 20% increase in sales quarter-on-quarter, but flattish profitability, especially it's a bigger quarter, more operating leverage, perhaps even a better mix with more trucks coming from Europe. Order intake has been very strong lately. So what is the headwind there?

[Eva Scherer, executive]

Yes. I think I answered it already. So we did have a positive impact in quarter 3, also coming from provision releases from an incentive perspective. And then overall, the mix is actually not really better in quarter 4. I mean there are always a lot of moving parts in a global business that is Mercedes-Benz Trucks.

And we do also see that pricing is obviously not easy in these markets. We're winning back share. We're being disciplined in pricing. But of course, in a difficult market environment, we already had negative net pricing in quarter 3 that will continue in quarter 4. We have seasonally always a bit higher spending levels in quarter 4 with the cost ramp-up in really all areas. And so that's where we see that coming from.

[Miguel Nabeiro Ensinas Serra Borrega, analyst]

And then going back to North America and a little bit more broadly and if we take a step back, given the setup of tariffs at the moment, if we had a favorable market, if volumes do ramp up perhaps in '26 or '27, do you think the midterm guidance for margins of 10% to 14% is still possible? Or do you think the business setting will change so significantly that you may now operate on a different margin range?

[Eva Scherer, executive]

Thank you, Miguel. So that's now really looking further into the future. What I can say is what we have presented at the Capital Market Day, this is our target level, and that's what we stick to, and these are targets for 2030. And of course, with a different tariff environment now, we need some time on mitigation.

So that's where, obviously, on a short-term basis, you will see an effect. But we do believe when we look at it on a 5-year basis, structurally, we're well on track. And we do believe that we have a lot of potential as we outlined in our Capital Market Day.

[Miguel Nabeiro Ensinas Serra Borrega, analyst]

Yes. I just wanted to understand the margin coming down from 12% to 6% and even lower in Q4. How much of that has been driven by obviously lower volumes, your volumes are quite weak?

And how much will be the impact of tariffs going forward? So if we shave, I don't know, 5 percentage points from a weaker market and 200 basis points for tariffs, we can kind of give us the range for a new margin setting. But I just wanted to understand if the 14% is still possible even with the tariffs.

[Eva Scherer, executive]

Yes. I mean, again, when it comes to the future, I think I explained how we think about that. What I can tell you about quarter 3. I mean, the tariff impact was a double-digit impact.

And the rest, I mean, obviously, also came from a mix effect, but mainly volume. So that gives you probably an idea. I mean we are operating under significantly lower volumes now in the second half of the year than in the first half of the year.

[Operator]

The next question comes from Hemal Bhundia from UBS.

[Hemal Bhundia, analyst]

Hemal from UBS. Just could you remind us the levers that you have available to you in Q4 in achieving the industrial free cash flow target? I understand Q4 is seasonally strong for industrial free cash flow, but any specifics you would like to call out? Is it more driven by inventory or profitability?

[Eva Scherer, executive]

Yes. Very good question, Hemal. Thank you for that. So the free cash flow increase in quarter 4, the biggest increase versus the first 3 quarters of the year is coming from Mercedes-Benz Trucks, and that's something that we see every year.

So we always see that year-end Sprint with a very strong seasonality. And it's mainly coming from inventory reduction. Of course, there are always also some movements in receivables and payables, but by far, the biggest chunk is coming from inventory reduction.

And within that, and I said it already, it's a reduction of the new vehicle stock because we then also have the shutdown over Christmas. And then it's a reduction of raw materials and unfinished goods because that's where we have very high inventories right now because of the ramp-up issues because we need to get the trucks really finished and out of the door and delivered to our customers, and our customers are waiting for it.

So when we talked before about confident are we going to achieve also our sales and profitability targets in quarter 4 during these supplier challenges in Mercedes-Benz Truck, well, our customers are waiting for the trucks. And this is the biggest motivation we have to get it solved.

[Hemal Bhundia, analyst]

Understood. And on my second question, on Mercedes-Benz, you mentioned selective pricing. Is that more so much on a geographic basis? Or is it by a certain customer type?

[Eva Scherer, executive]

It's something that we see in Europe because of the market weakness. So we do see that in India and also in Brazil, we still have a more positive pricing development. But in Europe, obviously, it's a competitive situation right now as the market has been down for a while.

[Operator]

The next question comes from Frank Biller from LBBW.

[Frank Biller, analyst]

The one question is just maybe you can confirm the dividend payout ratio of 40% to 60% of net profit. That would be helpful. And the other question is on electrification. So there was a huge increase in the third quarter coming from the order intake.

Was there a special topic from the pricing side that you have such a big increase? And what is your expectation for the next years to come? Is it speeding up? Or is it more slowing down in these circumstances?

[Eva Scherer, executive]

Yes. Thank you, Frank, for your question. I'll take the electrification one first. So why is the order intake so good? Because we are pretty sure that we have the best product in the market with the eActros 600. We also now launched the eActros 400.

I said that we are the market leader in heavy-duty electric trucks. In Europe now, we had more than 50% market share in the third quarter. I think that speaks very clearly for the quality and customer benefit of the eActros.

And we do see that our customers see this as a strong advantage and the customers that are buying the truck, they also see already total cost of ownership benefits if they are operating in countries in Europe where they have a toll advantage from a road toll perspective and where they have the access to the charging infrastructure, for example, when they have their own chargers and distribution centers because the public charging infrastructure is really still lacking.

And that's what's holding us back. We do believe we've really demonstrated that we did everything we can do by having a very competitive product, and we also see that our price is at the right level.

So this -- there's nothing that we're seeing where we're under price pressure, but we see that our pricing is value-based for the eActros, and this is also being accepted.

But now the infrastructure topic is the biggest one because if our customers cannot charge their trucks for the routes that they're using, then they also cannot order one. And that is something where we do need now also governmental support, and that's something that we're lobbying for also in the European Commission level.

So that's where we have to see how the development will ramp up, but we see that if customers buy a truck, there's more than a 50% chance that it's an eActros and not a competitor product. So that's good.

On the dividend payout ratio, yes, 40% to 60% is our ratio. I mean, we're not religious about it. And obviously, we will look at the dividend policy once we have closed the year, and then we will give you.

But it's very important to us that we have a strong capital allocation policy. We do generally believe that also stable dividends are important, but we'll give an update once we have decided on dividend payout for next year.

[Frank Biller, analyst]

Maybe on the margin side from the electrification. So margins are still positive, but lower than combustion engines, right, yes?

[Eva Scherer, executive]

No, they are not. So when we look at it on a percentage basis, so gross profit in percent of revenue, it's a very similar level. And then, of course, the absolute margin contribution is higher because the price of an electric truck is still quite a bit higher than a diesel truck.

[Operator]

The last question comes from Nick Housden from RBC Capital Markets.

[Nicholas Housden, analyst]

Just one left for me. I was wondering if you could just provide us with an update on the vocational market in North America. It's obviously been quite a nice counterweight during the on-highway recession. So just wondering how you're seeing that market heading into 2026.

[Eva Scherer, executive]

Thank you for your question, Nick. So the vocational market has been holding up a bit better over the last couple of quarters than the on-highway market. And I mean, obviously, not as strong as last year, which was an extremely strong year for vocational, and we're gaining market share. The Western Star product range is extremely well received.

So we do see that we continue on our trajectory of gaining market share towards our target of 35% market share in 2030. So we are on track there. Of course, also a weaker market for vocational this year than last year, but it's holding up better.

[Marcus Poppe, executive]

So ladies and gentlemen, thank you very much for your questions and for being with us today. Thank you very much, Eva, for answering the questions on this, I would say, quite extensive call. After a short break, the Q&A call for media will start 9:20.

Now as always, Investor Relations remain at your disposal to answer any further questions you might have. We're looking forward to staying in contact with you. Have a great day. Thank you, and goodbye.

[Break]

[Thomas Hövermann, executive]

Good morning, everyone. This is Thomas Hövermann speaking. Thank you for taking your time, and welcome to this conference call on our third quarter results of 2025. Here in this call, I'm welcoming Eva Scherer, CFO of Daimler Truck.

Before we start with this media Q&A session, as usual, the following notes. This call is conducted in English. So please be so kind to ask your questions in English as well. The operator will now explain the procedure for registering your questions.

[Operator]

[Operator Instructions]

[Thomas Hövermann, executive]

And we are already having the first question, Markus Klausen.

[Markus Klausen]

My name is Markus Klausen from Dow Jones. I have 2, if I may. The first one is on the planned share buybacks. Could you give us a rough estimate when they will start in the first or possibly the second half of next year?

And the second question is about the margin forecast for this year. Is it fair to assume that the return will be a little bit more on the lower end of the range given the weak performance in North America? I believe you already mentioned this in the analyst call, but the connection was not optimal.

[Eva Scherer, executive]

Thank you, Markus, for your question. Yes, I can confirm the second part with the margin outlook for this year. So it will be more towards the lower end of the range. That is correct. And the first one on the share buyback. I can't give you a timing yet.

But as I said on the analyst call also, we are currently finalizing our budget planning for next year. We are working on understanding all the stipulations within the new 232 regulation. And once we have clarity on that, that's when we can give an update on the share buyback. And that's why we haven't started yet because we don't have that clarity yet.

[Thomas Hövermann, executive]

Next one on the line is Benjamin Wagner [indiscernible].

[Benjamin Wagner]

Yes. Benjamin Wagner, [indiscernible] Frankfurt. Can you give us an update on the Cost Down Europe Savings program? And with a special question, how many of the 5,000 jobs you want to cut have already been cut? And how many of your employees have already moved to the so-called orientation platform?

[Eva Scherer, executive]

Thank you for your question. So what I can say is we are on track with our time line for the Cost Down Europe program, and we're working through the actions step by step. And we are to achieve a low triple-digit million saving amount there next year, as we have also indicated during our Capital Market Day. And on details about headcounts, we do not comment.

[Thomas Hövermann, executive]

Next one on the line is Ilona Wissenbach.

[Ilona Wissenbach]

I have a question about the EU CO2 regulation. The truck makers asked the EU for less stringent CO2 rules. And also Daimler was warning about draconian penalties coming up otherwise and noting that those foreseen now are 10x higher than those for cars.

I would be interested what is draconian? Have you assessed and how far you reached the targets and how high the fine would be you still have to face? And environmentalist groups are concerned that if this is watered down that the OEM may be less ambitious to offer e-trucks and perhaps it would also have a dampening effect on demand.

[Eva Scherer, executive]

Thank you for your question, Ilona. So first of all, based on our planning, we can achieve the targets in 2030 because we have the portfolio that enables us to transition to zero emission. And this is clearly demonstrated by our market share.

As I said during my speech today, we have more than 50% market share in electric heavy-duty trucks in quarter 3. We are the market leader here in Europe. So this shows we have done our homework. We have spent a lot of money in R&D in order to develop the products needed in order to achieve the CO2 targets. But what we cannot influence is the availability of infrastructure.

So that's where we're really asking for support because we need to ensure that our customers can drive the trucks where they need to go based on their route planning, and we need to make sure that then for them, the total cost of ownership works.

And that is something where there is some work to do, and we do not see the ramp-up in infrastructure progressing as fast as we need it. And so we are -- what we are wanting is really a link of infrastructure availability with the penalties because otherwise, you're penalizing the OEMs without enabling our customers to run the trucks.

And with draconian penalties, I mean, you mentioned it, if you talk about 10x the passenger car penalties, of course, these are huge amounts. And this is why we do believe now is the time because we still have a couple of years to go until 2030 to really make sure that we put everything in place, but that it's also clear that ultimately, when the infrastructure is not there, we should not be held accountable if we have done our homework as an industry and have invested billions of euros into our electric truck portfolio.

[Ilona Wissenbach]

And perhaps if I may, can you a bit elaborate more on the Nexperia chip situation? You said during the analyst call, the production is not affected and you manage it quite well yet. How is the situation? I think you are also depending on Tier 1 suppliers and -- or do you not need that many of those standard Nexperia chips?

[Eva Scherer, executive]

Yes. I mean we need the exterior chips as everybody in the industry, I think. But in trucking, we need less than in the passenger car sector. But of course, also for us, it is a big topic. But our production is currently not affected. And then, of course, we're working on mitigations. We have secured broker buys, and we do hope that we'll get through the next couple of weeks until hopefully, also there will be -- that the situation could potentially be resolved, but we're doing what we can as everybody is and production is running right now and secured.

But it's really a situation where week by week, you are working on getting the parts of -- of course, also working very closely with our suppliers, but we're also doing broker buys ourselves to provide our suppliers with the chips because it's just whatever you can get your hands on right now, that's what you do.

And we have learned a lot during the last supply chain crisis, and we do have good access when it comes to the supply chain. So everybody is supporting and everybody is cooperating closely to avoid an impact, but we do not have obviously full visibility. It's a week-by-week thing.

[Thomas Hövermann, executive]

We have now Alexander Jungert in line, Mannheimer Morgen.

[Alexander Jungert]

This is Alexander Jungert, Mannheimer Morgen. Just one short question. You were talking about the weak business in the U.S. Are there any effects on sites here like Mannheim or Wörth?

[Eva Scherer, executive]

Thank you for your question, Alexander. I mean, we do have some component supplies from our German powertrain sites into the U.S. And I mean, of course, a low market overall is impacting also our German powertrain plants. But I mean, this is all already considered in the production programs that we have now set up for the quarter 4.

[Thomas Hövermann, executive]

So it looks like that there are no more questions. All right. Ladies and gentlemen, then we have already reached the end of today's conference call. Thank you for participating. The recording of the session will be available later today on our Daimler Truck website. If you have any further questions, please do not hesitate to contact the Daimler Truck Communications team. We wish you all a good day. Goodbye.