Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: The last time we spoke, we've had some changes. The
Speaker 2: EU has voted to impose some tariffs on Chinese automobiles.
Speaker 2: What I want to understand from you is whether you've
Speaker 2: had some Chinese car companies knock on your door, dial
Speaker 2: your phone number and ask you to sell some of
Speaker 2: your brands to them. Is that happening.
Speaker 3: Well, first of all, thank you for inviting me. Yet
Speaker 3: that happened in the past. In the past, some Chinese
Speaker 3: car companies asked me to sell them some of our brands,
Speaker 3: which I believe is a significant asset of our stellants company,
Speaker 3: and therefore I rejected the request, and we are keeping
Speaker 3: our brands and of course doing good business with them.
Speaker 3: So the answer to that I gave them is no,
Speaker 3: thank you very much.
Speaker 2: Have they followed up on that request in the aftermath
Speaker 2: of that vote at the EU in the last few weeks.
Speaker 3: No, they didn't. No, they didn't. But it's obvious that
Speaker 3: with our Leap Motors investment and the equity that we
Speaker 3: have in Lip Motors, and most importantly the fact that
Speaker 3: we control all of their exports outside of China, it
Speaker 3: is quite clear that We have the manufacturing footprint not
Speaker 3: only in Europe but all over the world to bring
Speaker 3: to our partner and to ourselves the manufacturing sourcing that
Speaker 3: we need to go and do a good business out
Speaker 3: of the constraints that we need to manage. And of
Speaker 3: course tariffs are a constraint, and you can go around
Speaker 3: tariffs if you manufacturing inside of the bubble that has
Speaker 3: been built. This is what we are offering to Lip Motors.
Speaker 3: Everything that is sold outside of China is under our
Speaker 3: control through a fifty one forty nine JV called the
Speaker 3: Lipwotter's International and we are of course creating that value
Speaker 3: thanks to our dealer network system and our manufacturing system
Speaker 3: all over the world. This is a competitive edge of
Speaker 3: salentties that most of our competitors cannot reach.
Speaker 2: Right now, challus give us a little bit more to
Speaker 2: detail on how taris might impact the company. And I
Speaker 2: just want to say for the benefit of the audience,
Speaker 2: Lead Motor, of course, is a jav At joint invention
Speaker 2: you have with the Chinese manufacturers. Some of those cars
Speaker 2: are behind you as we speak. Callus, how are you
Speaker 2: thinking about retalentory measures coming from the Chinese? How well
Speaker 2: insulated you think you are from the potential of that developing.
Speaker 3: Well, First of all, what we see when we work
Speaker 3: with our partners from Lip Motors is exactly where their
Speaker 3: competitive edge is. Their competitive edge is very localized in
Speaker 3: a certain number of systems of the car, which is
Speaker 3: good to know because that's where we need to work
Speaker 3: harder to be more competitive compared to what we do today.
Speaker 3: So we see that. We also see that they have
Speaker 3: the ability to be much more affordable than the Western
Speaker 3: world and then meet the expectations of the consumer base
Speaker 3: that we have in the Western world, which is basically
Speaker 3: the consumers want to buy evs at the price of ices,
Speaker 3: and that's exactly what they are able to do today.
Speaker 3: We are also able to do that with some of
Speaker 3: our offerings in Europe, but we need to expand this
Speaker 3: competitive edge to many other brands and many of the models.
Speaker 3: So that is a competitive advantage that our company has,
Speaker 3: and by having this stability with them, we can leverage
Speaker 3: their cost competitiveness, their speed to go to market, and
Speaker 3: at the same time, if needed, to go around the
Speaker 3: custom duties that the Western world is trying to impose
Speaker 3: on us. That also means that compared to other Western
Speaker 3: World actors, we are in a much better position for
Speaker 3: the future than some of them.
Speaker 1: Carlos, can you just elaborate on that. Are you basically
Speaker 1: saying that the only way to really provide cost effective
Speaker 1: EVS to a European consumer is to get around some
Speaker 1: of the up to forty five percent tariffs that the
Speaker 1: EU just voted on.
Speaker 3: What I'm saying is that we are leveraging a strategy
Speaker 3: that is based on two major pillars. There is one
Speaker 3: pillar with lip Motors that brings EV technology at the
Speaker 3: price of ice despite the tarvists that you are mentioning,
Speaker 3: because we can go around the tarvis by manufacturing the
Speaker 3: cars inside of the bubble. That's one. On the other side,
Speaker 3: we have a dedicated platform that we call the smart
Speaker 3: car platform that we are using to bring compact cars
Speaker 3: to the market like new Citron C three that we
Speaker 3: bring to the market at twenty twenty three thousand euros,
Speaker 3: which is the core of the market in terms of
Speaker 3: PUREV and that price is extremely competitive. It's on par
Speaker 3: with the Chinese capability, and that kind of offering is
Speaker 3: also profitable for astilities. So not only we have the
Speaker 3: pillar of lip Motor, which is very strategic. We also
Speaker 3: have the internal pillar, which is the smart car platform
Speaker 3: that we are now using for example for the three
Speaker 3: Citro N hatchback, but also for the c Cross crossover version,
Speaker 3: and many other models will follow Fiat models, but also
Speaker 3: Opple models, and that is going to bring a lot
Speaker 3: of competitiveness to the market. So what I'm saying is
Speaker 3: that Sententtis is in a perfect condition to leverage affordability
Speaker 3: with profitability and zero emission in the near future.
Speaker 1: Carlos, how important is it in order to retain profitability
Speaker 1: and increase going forward? How important is it to pair
Speaker 1: back certain brands that aren't performing as well and that
Speaker 1: don't fit within those targets? And thinking in particular in
Speaker 1: North America.
Speaker 3: In North America, we have a very specific problem which
Speaker 3: is a very operational problem, not at all rocket science.
Speaker 3: In North America, we got trapped by a marketing plan
Speaker 3: on the second quarter of twenty four that was very audacious,
Speaker 3: very daring, and it didn't work. It failed. So we
Speaker 3: got trapped by that marketing plan and then we needed
Speaker 3: sometime to discuss the best way to rebound with our
Speaker 3: US dealers, which we did. I did it personally in
Speaker 3: August this year. Now we have a new, let's say,
Speaker 3: more conventional plan that is active and it's working very well.
Speaker 3: Over the last three months, we could reduce our US
Speaker 3: dealer inventory by fifty two thousand vehicles, and we will
Speaker 3: be before the end of this year, before Christmas below
Speaker 3: the ceiling of three hundred and thirty thousand vehicles, which
Speaker 3: we consider is the seiling for a normalized inventory. This
Speaker 3: problem is now being fixed. It's not rocket science. We
Speaker 3: have discussed it with our dealer body. I think we
Speaker 3: have the right dynamics right now and we expect this
Speaker 3: to be fixed this year. So that was what happened.
Speaker 3: Regarding the brands, the brands are very healthy, the rem brand,
Speaker 3: the Jeep brand, with all the new models that we
Speaker 3: are bringing, the Dodge brand, but also very soon the
Speaker 3: new Chrysler models. I think they are very healthy. We
Speaker 3: just need to do a proper operational work in terms
Speaker 3: of way to go to market and collaboration with our dealers.
Speaker 3: I think we have the capability to do that, and
Speaker 3: I believe that Ram and Jeep are already leading the
Speaker 3: in terms of the market share recovery that you can
Speaker 3: see as we improve our market share between September and
Speaker 3: July from seven point two to eight point zero percent.
Speaker 3: So market share is up, inventories are down. There will
Speaker 3: be normalized by Christmas, and I think we are back
Speaker 3: on a quite nice trend. But now we need to
Speaker 3: deliver the results. This is what our investors and the
Speaker 3: community of investors expect from Uskallos.
Speaker 2: Are you open to selling any brands?
Speaker 3: Not necessarily. I'm not necessarily open on that. Of course,
Speaker 3: we consider any offerings or any proposals, like in any
Speaker 3: open minded business team, as we consider we are, so
Speaker 3: if there are proposals, will study. But we are not
Speaker 3: seeking any sale of any of our brands right now.
Speaker 3: That's very clear.
Speaker 2: Because last time we spoke you talked about corrective action.
Speaker 2: You've got a mandate until I believe the end of
Speaker 2: twenty twenty six. As the CEO of this company, I
Speaker 2: shared some of the details the stats on the other
Speaker 2: capacity across the European or the manufacturing sector. You're familiar
Speaker 2: with them. They're worth repeating. Nearly a third of the
Speaker 2: major car plants from Europe's Big five are producing half
Speaker 2: the vehicles they have the capacity to make. And I'm saying, hey, Carlos,
Speaker 2: just wondering when are we going to make the decision,
Speaker 2: to make the corrective decisions that seemingly need to take place.
Speaker 2: One of two things needs to happen. Either Yuka capacity
Speaker 2: or European politicians. Governments are going to come out with
Speaker 2: the right kind of demand side incentives to buy the vehicles,
Speaker 2: because that's not there right now. When do we actually
Speaker 2: face the reality check? Is it this year? Is it
Speaker 2: next year? How much longer can we hold on with
Speaker 2: excess capacity?
Speaker 3: Your comment is very valid. It is quite clear that
Speaker 3: right now we only ask two things to the governments,
Speaker 3: and specifically the European governments. We ask stability of the rules.
Speaker 3: We do not ask for any kind of postponement because
Speaker 3: we are ethically committed to contribute to fixing the global warming,
Speaker 3: so we don't ask for any postponement. We ask for
Speaker 3: stability from one side, and from the other side, we
Speaker 3: ask the governments to stimulate the demand, which is not
Speaker 3: to help serentists, but to help the consumer so that
Speaker 3: the consumer can buy eves at an affordable price, i e.
Speaker 3: At the same price of IC. So that's what we
Speaker 3: are telling them. We'll see if they have the capability
Speaker 3: to do so, and If not, then we'll have to
Speaker 3: take decisions. As you say, I assume that those decisions
Speaker 3: will be made in the next few months. I think
Speaker 3: before the end of the year. If nothing happens, we'll
Speaker 3: have to make those decisions. That's absolutely clear.
Speaker 2: Becala's just to sit on that, because this is really important.
Speaker 2: Your message to the European government and government's national government
Speaker 2: across the continent. They've got two three months together and
Speaker 2: act together, otherwise you're going to have to close plants.
Speaker 3: We had a very good concrete example that you reported
Speaker 3: in the media about our dialogue with the UK government
Speaker 3: about the z F mandate. The ZF mandate in the
Speaker 3: UK had a threshold that was the double of the
Speaker 3: natural market demand. So if you need to put in
Speaker 3: the market the double of the market demand in terms
Speaker 3: of pure zero mission vehicles, of course it has a cost.
Speaker 3: It has a cost, and if there is a cost,
Speaker 3: and we need to compensate for that cost with additional
Speaker 3: decisions that will compensate for that cost. That dialogue has
Speaker 3: been ongoing for several months. We are now reaching a
Speaker 3: point where we have to make the decision, and again
Speaker 3: that will happen in the next few weeks. If the
Speaker 3: governments want us to sell a mix of BEVs that
Speaker 3: is above the natural demand of the market, they need
Speaker 3: to help to stimulate the demand so that we can
Speaker 3: reach that level of ZEV mandate without destroying the profitability
Speaker 3: of the companies. If that is the case, then we
Speaker 3: need to restore that profitability to ensure the sustainability of
Speaker 3: the company because we are trying to meet a ZEV
Speaker 3: mandate that is not what the market demand is. So
Speaker 3: that's the situation, which is I think a big opportunity for fustlities.
Speaker 3: Const Tananties is among the companies that has the highest
Speaker 3: number of BEVs on sale. By the end of this year,
Speaker 3: we'll have forty models on sale on the B segment
Speaker 3: only Hatchback and SUV we have sixteen models on this
Speaker 3: most important segment in European market. So we have the offering,
Speaker 3: we have the technology, we have the appealing products, we
Speaker 3: have the design, we have everything. We just need to
Speaker 3: stimulate the demand and help the middle class consumer to
Speaker 3: fix the affordability problem that we still have in our hands.
Speaker 2: Callis I've got to score? Is one extra question in
Speaker 2: I know you're busy. A European order manufacturer's investable right now,
Speaker 2: your stock is down by more than forty percent. What
Speaker 2: on earth do you tell investors as we're in between
Speaker 2: this horrible window right now where either you're going to
Speaker 2: have to do one thing or the government's going to
Speaker 2: have to do something else, but in between, it's so
Speaker 2: difficult for investor to make a decision to buy your stock.
Speaker 2: What's the message you give investors right now?
Speaker 3: Pactly understand why they are puzzled, and I'm sorry for that.
Speaker 3: It is quite clear that we are going to go
Speaker 3: back to them very soon to tell them that we
Speaker 3: fixed the US dealer inventory issue. This is the number
Speaker 3: one thing we need to fix. It's very operational, it's
Speaker 3: not rocket science, and I understand this is the number
Speaker 3: one priority. I think we are on the right trend.
Speaker 3: As we reduce the inventory by fifty two thousand vehicles
Speaker 3: in the last three months, the dynamics are good. We
Speaker 3: expect to reach a level that is below the ceiling
Speaker 3: of three hundred and thirty thousand by the end of
Speaker 3: this year. As soon as soon as this lending is
Speaker 3: in my hands, which I think it will very soon,
Speaker 3: I will go back to them to explain to them
Speaker 3: that that problem is fixed, and then I will leverage
Speaker 3: all the other competitive edges that we have on our company,
Speaker 3: which I believe are very big in terms of technology,
Speaker 3: in terms of bringing the right TVs with the right
Speaker 3: performance to the market, in terms of strategic partnerships like
Speaker 3: the one we have with it Motel. So they will
Speaker 3: see back very soon. But first I need to take
Speaker 3: care of my homeworks because that's my responsibility and I'm
Speaker 3: excited about fixing those issues.