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