Good afternoon, ladies and gentlemen. I would like to welcome all of you to our telephone conference for the third quarter results. Today, we have a slight change to the normal agenda. Nicolas Peter, Member of the Board of Management and responsible for finance, will provide you with an overview of the BMW Group's business development. He will then be available to answer your questions. Our Chairman, Oliver Zipse, cannot be with us today. He is part of the delegation with German Chancellor Scholz on his visit to China. Currently, he's on his way to Berlin. I would first like to say a few words to put this into context. The BMW Group is a global company. Our vehicles are sold in 140 countries. We have production sites in 31 locations in 15 countries and maintain a worldwide research and development network. Europe, including our home market, Germany, Asia, including China and the Americas, including the U.S., are among our most important markets. In all regions, we are a strong, reliable partner with a long-term focus. Today, just like the global economy, our industry is more interconnected than ever. That is why we continue to advocate for cross-border collaboration as well as constructive cooperation. We believe this is the only way to find answers to the big issues of our time, including, first and foremost, climate change. On this path, major regions such as China, Europe or the U.S., can and must make a significant contribution through their influence and economic power. Protectionism and market barriers are exactly opposed to these efforts. Ladies and gentlemen, dialogue is key. That is why our CEO appreciates being part of the chancellor's delegation. Ladies and gentlemen, thank you very much. Now, let me now hand over to our CFO, Nicolas Peter. Thanks a lot, Max. Good afternoon, ladies and gentlemen. The BMW Group delivered a solid performance in the third quarter of 2022. In a highly volatile global business environment, we can look back on a successful quarter. Sales totaled just under 588,000 vehicles on par with a strong prior year quarter. The EBIT margin in the automotive segment came in at 8.9%, which is at the high end of our target range for 2022. The semiconductor shortage and supply chain disruptions have been with us all year, not to mention bottlenecks in vehicle and parts logistics, partly due to pandemic-related lockdowns in China. All of these things have disrupted production. Since we were unable to fully meet demand, we adjusted our volume targets at the half year mark. For the full year, we are targeting slightly lower sales than in 2021, with solid growth forecasted for the second half of the year. After the third quarter, we are on track to meet our goal. Thanks to our flexible production network, we once again did an excellent job of steering the BMW Group with a difficult supply situation in the third quarter. From purchasing to supplier management to sales and marketing, our employees are delivering the highest standard of performance each and every day and doing everything they can to meet customer demand. We are partnering with our suppliers to continuously optimize our processes and make them more effective and more efficient. Flexibility and operational excellence are what makes the BMW Group resilient. Our sales are also benefiting from our presence in the three key regions of the world, Europe, the Americas, and Asia, as well as from our highly attractive and updated models. This became especially clear in the month of September, where sales grew by 6.6% compared to the same month of last year. Our order books remain full, in particular for our highly attractive range of all electric models. Here, we continue to see dynamic growth. In the first nine months, we delivered more than 128,000 BEVs to customers, an increase of 114.8% compared to the previous year. Ladies and gentlemen, let's take a look at the financial key figures for the first nine months. I'll start at group level. Third quarter revenues were up 35.3% on the previous year, reaching just under EUR 37.2 billion. Revenues for the first nine months climbed to EUR 103 billion. This significant increase in revenues mainly resulted from the full consolidation of our Chinese joint venture, BBA. Group earnings before tax for the third quarter reached EUR 4.1 billion, which is 20% higher than the already strong result in the same quarter in the prior year. Pre-tax earnings September year-to-date totaled just under EUR 20.3 billion. This 54% increase over the previous year largely came from the fair market valuation of previously held equity interest in BBA, which resulted in a one-time effect of around EUR 7.7 billion. The group EBT margin came in at 11% for the third quarter and 19.6% for the first nine months. Our research and development costs in accordance with IFRS totaled just under EUR 4.9 billion for the year to the end of September. This represents a year-on-year increase of 12.6%. The R&D ratio, according to the German Commercial Code, stood at 4.7% at the end of September. Due to the strong increase in revenues, this figure was 0.6 percentage points lower than for the same period of last year. We expect the figure for the full year to be within our target range of 5%-5.5%. We are constantly working on the future of sustainable individual mobility and the long-term transformation of the BMW Group. To achieve this, we are investing in new models, including our Neue Klasse. In the third quarter, we once again pushed forward with electrification of our vehicle fleet and digitalization. For example, Plant Leipzig launched its second line for standard production of battery modules. In this way, the plant is making an important contribution to supplying the growing number of electrified vehicles with battery components. At Plant Dingolfing, we rolled out an innovative digital system for the production of axle supports. This makes us more flexible and ensures optimal use of our production capacity. Capital expenditure for the first 9 months of 2022 totaled just under EUR 4.7 billion, EUR 2 billion more than the figure for the previous year. More than 40% of this increase is a result of investment at BBA. In the first nine months, investment was also focused on the ramp-up of e-mobility. We expect to see the usual seasonal increase in investment activity in the fourth quarter. The CapEx ratio for the year to the end of September was 4.5%. For the full year 2022, we expect a CapEx ratio of around 5.5%. Ladies and gentlemen, let's move on to the individual segments. First, the automotive segment. Segment revenues for the third quarter totaled EUR 32.3 billion and were therefore 42.7% higher year-on-year. Revenues for the year to date reached a new all-time high of EUR 89 billion. The full consolidation of BBA made a significant contribution to this increase. Other operational business sectors also benefited revenues. We are still able to command good prices for our vehicles. In combination with a consistently strong model mix and positive development in pre-owned car markets, we were able to more than offset the impact of the decrease in sales. Currency translation effects also played a part due to the weak euro. The cost of sales in the automotive segment reached EUR 27.3 billion in the third quarter and EUR 75.4 billion for the first nine months. This is 30% higher than for the same period of last year. Here, once again, the full consolidation of BBA into the group financial statement contributed to the operational increase in the year-on-year comparison. Headwind from the full consolidation had a total impact of EUR 2.7 billion. Of this amount, depreciation from the purchase price allocation accounted for around EUR 1.4 billion as planned. Around EUR 1.3 billion in intercompany profits from intragroup deliveries were eliminated in the first half year. In the first nine months, we saw an increase in costs for materials and logistics of almost EUR 2 billion, partly due to the development in raw material and energy prices. The higher percentage of electrified vehicles also contributed to the increase in costs. The segment's third quarter operating result totaled just under EUR 2.9 billion, a 63.6% increase on the same quarter of last year. EBIT for the year to the end of September was only slightly lower than last year at EUR 7.7 billion. However, the figure for 2021 included the partial release of the provision for the EU antitrust proceedings. EBIT for the current year was also impacted by the effects from the full consolidation of BBA I already mentioned. Overall, we are seeing high earnings quality, which is also reflected in the EBIT margin. The figure for the third quarter was 8.9%, and for the first nine months it was 8.7%. This keeps us on track for the high end of our target range of 7%-9% for the full year. Excluding the consolidation effects mentioned above, the EBIT margin would be 10.1% for the third quarter and 11.7% for the first nine months. This underlines the strong operating performance of our core business. The segment financial result for the year to the end of September totaled around EUR 8.2 billion and was therefore EUR 6.5 billion higher year-on-year. The main driver for this was the revaluation of the previously held BBA shares, resulting in a one-time effect of EUR 7.7 billion. The at-equity result decreased by just under EUR 1.4 billion since earnings from the BBA joint venture were only included until 10th February. Free cash flow in the automotive segment totaled EUR 9.9 billion at the end of September. It includes an inflow totaling EUR 5 billion from the acquisition of BBA's liquid funds in the first quarter. In the third quarter, free cash flow stood at EUR 2.1 billion, primarily due to the high operating profit. In the fourth quarter, we will also see increased investment in electro mobility. We also expect higher advanced tax payments as a result of business development. For the full year, we therefore still targeting a free cash flow of at least EUR 10 billion. In the financial services segment, just over 1.18 million new contracts were concluded with retail customers in the first nine months of the year. This decrease of 21.9% from the previous year reflects higher interest rates in general and the price increases associated with them. At the same time, competition remains intense in the financial services sector. In addition, the tight supply situation over the course of the year led to limited availability of new vehicles. Thanks to our strong product mix and higher transaction prices, we have been able to partially offset the downtick in new contracts with a higher contract volume of financed vehicles. The volume of new business from all financing and leasing contracts with retail customers was therefore only 13.2% lower than the same period of last year. Segment earnings before tax for the first nine months amounted to nearly EUR 2.7 billion. This represents a decrease of 8.6% compared to the strong prior year. We continue to see high income from the resale of our end-of-lease vehicles, especially in the U.S. and Europe. In contrast to last year, the macroeconomic parameters and overall conditions for consumers have deteriorated. For this reason, we recognized higher provisions for credit risk in the third quarter. Nevertheless, the credit loss ratio currently remains at a historically low level. In the motorcycle segment, we just sold over 159,000 units from our attractive product portfolio by the end of September. This means we were once again able to surpass the results for the same period of last year by 1.7%. Segment EBIT for the first nine months was on par with last year at EUR 322 million. The EBIT margin came in at 13%. Ladies and gentlemen, let's move on now to the outlook for our key performance indicators. Owing to the full consolidation of BBA, we expect group pretax earnings to be significantly higher. The number of group employees will also increase significantly due to the integration of BBA staff. In the automotive segment, we anticipate a significant year-on-year increase in deliveries in the fourth quarter. We are therefore able to confirm our guidance for the full year, targeting slightly lower sales. The percentage of deliveries from electrified vehicles is also forecast to increase significantly, and the number of all-electric vehicles should more than double. We expect the EBIT margin in the automotive segment to be within the range of 7%-9%. The CO₂ emissions performance indicator for our new EU vehicle fleet is developing better than originally forecast. Driven by the rapid ramp-up of our all-electric models, we now expect a moderate reduction in CO₂ emissions for our EU fleet for the full year rather than a slight reduction. In the financial services segment, we can confirm our target range of 17%-20% for return on equity. In the motorcycle segment, we anticipate a slight increase in deliveries with an EBIT margin within our target range of 8%-10%. Our guidance does not currently assume that Russia's interruption of the gas supply will lead to production stoppages in 2022. However, we do expect costs for energy, materials, and manufacturing to remain high. The macroeconomic environment remains dominated by high inflation and rising interest rates. This is causing conditions for consumers to deteriorate, which will affect their behavior in the coming months. We therefore continue to expect our higher than average order books to normalize, especially in Europe. Our guidance does not take into account any significant tightening of sanctions against Russia or reactive measures by Russia. The possibility of the conflict spreading outside of Ukraine or of significant prolonged lockdowns in response to the pandemic are also not included in our guidance assumptions. Ladies and gentlemen, also our environment remains volatile. The BMW Group is still on course to meet its targets for financial year 2022. We expect to post significant sales growth in the first quarter. After increasing levels of production during the third quarter, we plan to reduce inventories, especially in overseas markets. We are also counting on high sales numbers for our all-electric models, given the strong customer demand for e-mobility. A growing number of forecasts for 2023 predict that Germany and parts of Europe will enter into a recession. The U.S. and China are likely to fare slightly better. Despite these signs, the BMW Group's dynamic growth will continue. Thanks to our attractive product range and expertise in the field of electro-mobility, we are in a strong competitive position. Our globally balanced sales and production strategy allows us to respond quickly and flexibly to different market developments. We are seeing continuing high demand for our products. Our all-electric vehicles are especially popular. The BMW iX and BMW i4 are a hit with our customers. Orders are particularly strong for both these models. The long-wheelbase version of our 3 Series, the BMW i3, has been produced in China since the middle of the year and is being extremely well received in the Chinese market. The BMW iX1 and the BMW i7 will also be in showrooms before the end of the year. With the iX1, we are offering one of our high-volume models as a pure electric vehicle. This will provide the next impetus for our accelerated ramp up of electro-mobility. The all-electric i7 demonstrates the BMW Group's capacity for innovation like no other vehicle. It sets new standards for digitalization and the electrified driving experience. Further momentum will come next year from the continued renewal of our product range. The introduction of the BMW i5 is another important step towards electrification of our full model lineup. Ladies and gentlemen, the BMW Group remains focused on the long term. We are setting the course today for the successful future of our company. Our high profitability gives us the room to invest in a targeted and continuous manner in the long-term transformation of the BMW Group. In September, we presented the sixth generation of our battery cells. The newly developed BMW round cell is optimized for the future vehicle architecture of our Neue Klasse. It represents an enormous technological leap, an increase of 20% in energy density, a 30% increase in range, and a 30% increase in charging speed. The cost for the high-voltage battery will be reduced by up to 50%. Our partners will be investing in a total of six factories to produce the BMW round cell. In keeping with our local for local strategy, the sites will be spread across the key regions of Europe, China, and the Americas. The next highlight on our road to the Neue Klasse will follow in January 2023. At the CES in Las Vegas, we will be unveiling vision vehicles that will underpin our digital expertise. The future of the BMW Group is electric, circular, and digital. We are steering the BMW Group prudently through current market volatilities while keeping our sights set firmly on the future. We are in an excellent position to shape the transformation and achieve our long-term strategic objectives. Thank you. Thank you very much, Nicolas. Now, ladies and gentlemen, the line will shortly be open for questions. Please wait for some technical advice. Thank you. We will now begin our question and answer session. If you have a question for our speakers, please dial zero one on your telephone keypad now to enter the queue. Once your name has been announced, you can ask your question. If you find your question has been answered before it is your turn to speak, you can dial zero two to cancel your question. If you are using a speaker today, please lift the handset before making your selection. Once again, that was zero one on your telephone keypad to register for a question. Our first question comes from the line of Dorothee Cresswell from Exane. Please go ahead. Your line is now open. Yeah. Hello, everyone, and thank you for taking my question. I have two, if I may, and the first is around mix. Could you just talk a little bit more about how you think that the product mix will evolve in 2023? On the one hand, we know that consumers are feeling the pressure from rising rates and rising inflation, so they're going to perhaps trade down and opt for smaller or less well-equipped vehicles. On the other hand, you've reminded us of your very supportive product momentum into next year. I think you mentioned the X1, the 7, the 5, and I guess the XM is also worth flagging. If we take those two factors together, how substantial do you think is the mix deterioration likely to be next year? Maybe you're already seeing a change when it comes to the model mix in your order intake. My second question is around BEV production in North America. It seems that compared to your competitors, you're coming to the U.S. quite late with BEV production plans. I wondered, would you also consider making BEVs at the facility in Mexico as a nearer-term solution for delivery into the U.S.? Or are there factors that would prevent that from happening? Thank you. Thank you very much, Dorothy. We start with the question to the product mix next year. Yes, Nicolas. Dorothee, taking your first question, we are very confident regarding the product mix for a couple of reasons. First, before talking about new models, we have full year availability of X5 from production in China, which means we have on top the X5 produced in Spartanburg, which will help us to improve our share in this very important and highly profitable segment. In the same direction, the updated X7 will of course help us because it's a car, as you can imagine, with very high margins, will help us also to generate additional volume in 2023. The mix will further improve. Why? Because we are, if you look in particular Q3 and Q4, we are in phase out of the 7 Series. The 7 Series will kick in in the first markets from beginning of 2023 onwards. This will help us to improve further on the mix. Then we have on top the 5 Series a little bit later in the year. Regarding mix, we are confident. Your second question is related to the BEV production. Maybe first, it's important to remind we are investing more than $1.7 billion to build fully electric vehicles in our U.S. plant in Spartanburg. In seven-eight years from now, we will have introduced a total of six fully electrified vehicles in Spartanburg, which I believe fits if you look at the development of the U.S. market, which is trending, still trending towards SUV type of cars, fits perfectly to our local-for-local approach. Having this test to do the way we are taking our decisions, of course, has also to do with the renewal of our product portfolio. This is why we believe it makes a lot of sense to move on as we have outlined in two weeks ago. Furthermore, we are localizing our supply chain in particular with regard to battery cell supply by, as we've announced with, together with Envision. Envision will build a completely new battery cell factory in South Carolina with a capacity up to 30 GWh per year. Both combined puts us, I believe, in a very strong position. If you look at our year-to-date sales of all electric cars, I don't think we are running behind our competitors. On the contrary, we are ahead. Thank you very much, Dorothee. Next question, please. Our next question comes from the line of George Galliers from Goldman Sachs. Please go ahead. Your line is now open. Thank you. Thank you for taking my question. The first question I had was just on the underlying auto margin, excluding BBA, obviously a strong performance and double digit. But this has been coming down over the course of the year, having been at 13% in Q1 and 12% in Q2. I was wondering if you could articulate what have been the primary headwinds as we think about that margin sequentially over the course of the year? Perhaps related to that, has the increased penetration of battery electric vehicles played a role here? As you mentioned, your BEV penetration rate is among the highest of the traditional car players in the industry. I think when we look at the Neue Klasse and this 50% reduction in cell costs, that looks to be higher than what the industry at large is expecting over the coming years. Is that indicative of BMW having a major cost advantage on the cell in two-three years time, or the fact that perhaps your cell cost today is not the most competitive in the industry? Thank you. Thank you very much, George. Nicolas. Yeah. First of all, I definitely agree with your comment, George, that our underlying auto margin excluding BBA is definitely strong and is above our strategic corridor of 8%-10%. Now, if you look at the development in the course of 2022, it has a couple of reasons which has to be taken into account. In particular, in the third quarter, we had a higher impact from what I would call cost inflation, cost of logistics. We have increased our R&D expenditure due to our very strong plans which I've outlined regarding new models, Neue Klasse. Furthermore, you're absolutely right. The higher share of EVs has a, despite the fact that we have a strong contribution on those cars, higher than we expected, but still lower than comparable ICE cars. If you look at the mix development, you see on one hand side overall a positive impact from mix development coming in particular, what I've already outlined, the X5 China allocation, which is helping both China to sell more X5, but also on the other markets, because we continue to produce as previously in Spartanburg. That's overall a very positive impact. Part of this positive impact was in a negative way offset by the ramp-up, which is overall very good and important of all electric cars. If you look at our cost position moving forward, we expect indeed a further major step with on one hand side Neue Klasse, but also the sixth generation of battery cell technology. While I would really like to underline this once again, while we are in a positive way surprised by the strong profitability of EVs today already in our portfolio. That's the combination. Definitely, Neue Klasse, we will make an additional step moving forward. As I said, with the sixth generation, we expect from a cost perspective and depending on the model and the size of the battery in the model, up to 50%. Thank you. Good. Thank you very much. Thank you very much, George. Next question, please. Thank you. Our next question comes from the line of Tom Narayan from RBC. Please go ahead. Your line is open. Hi. Yes, Tom Narayan, RBC. Thanks for taking the question. Hi, Nicolas. Just a quick question on the margin guidance that you guys have. Or just, it would seem that the implication is Q4, you know, if we take, let's say the midpoint of that range is seemingly a pretty decent step down. Just wondering if you're really thinking about the upper end of that corridor. Wondering if this may be caused by some of the raw material cost inflation and specifically to suppliers that you called out last quarter. That's the first question. The next one is a follow-up to what George is talking about on the BEV margins. You know, obviously we've seen a lot of cost inflation with lithium. Is that really the cause for why the BEV margins are below ICE margins? Or is this something you're always, you know, kind of expecting in how the BEV margins were gonna play out? Thanks. Thank you very much, Tom. Nicolas. Tom, first of all, maybe first regarding Q4, as I've outlined, we are guiding for the full year EBIT margin in the upper part of the corridor, which would indicate we are staying at 8.7% year to date. We are not nervous at all about the quality of our business in the fourth quarter. On one hand side, what we expect is ongoing positive impacts from volume development in Q4. Pricing should continue to be strong. As I said, we will continue to see a negative impact in logistics and material costs, as I outlined in my speech. Now, if we look at it more, maybe a little bit more in general, cost of material and also including specific focus on lithium. Number one, as I said, we have almost EUR 2 billion cost increments from higher component and logistics prices in the first nine months. On top, higher raw material costs in the magnitude of EUR 0.5 billion. If we look at lithium, it's, I believe, worthwhile to mention we are directly sourcing the critical raw materials such as cobalt and lithium. We have to some degree fixed, sort of fixed prices with long-term contracts and the remaining procurement. This is why you don't see this significant increase in our results, which could be imagined by the higher lithium price in the current market environment. In order not to go into elaborating on this one. In order to increase what I would call also the planning stability, we are in detail investigating opportunities to use in the future financial instruments, in particular for the purpose of lithium price hedging. You probably are aware that we were the first OEM to start hedging cobalt back in 2020. We are confident that we might find a way to hedge lithium as well in the financial markets using financial instruments. Of course, apart from pricing, one of our major focus areas is also the processing, the refining of the capacity for lithium. Here we are working very proactively through the whole value chain to find the right sources of supply. Good. Thank you. Thank you very much. Thank you very much, Tom, for your question. The next one, please. Thank you. Our next question comes from the line of Patrick Hummel from UBS. Please go ahead. Your line is now open. Yeah, good afternoon, everybody. Thank you. Nicolas, two questions. My first one is really on the top line outlook. If I get you right, you said that you expect BMW's dynamic growth, as you called it, to continue next year. At the same time, you're expecting the order backlog to sort of normalize, especially in Europe. Can you just give a little bit more granularity on the order intake trend you've seen in the last few months, and whether the backlog versus end of second quarter has shrunk or has remained stable? If you allow, do you see that volume growth that you forecast for 2023 presumably happening without touching anything on the discount and incentive side? My second question is related to the China performance. It looks like, you know, China is no longer a big margin booster to the group, and we see that the market is getting more competitive, especially over the past couple of months. I'm wondering if you can share your latest thoughts about pricing and growth and also profitability of your China business going into next year? Thank you. Thank you very much, Patrick. Nicolas. Patrick, thanks a lot for your question. I'll start with China. Definitely, China continues to be a highly profitable market for our company for the BMW Group. Despite the fact this was mainly caused by the COVID situation, some volatility in the market. We continue to see if we look at particularly at the discount levels in China, there are hardly any discounts in the Chinese market. In particular for the X5 long version produced in China, the incoming orders are not strong. They are very strong. I would forecast, and this is why I've, in particular, referred to the U.S. and China in my speech, that we will see an ongoing strong development of our business in China from a financial perspective. This is of course not excluding, and you are, as of course, fully aware that, for example, for the time being, we have lockdowns in many cities. Of course, if you have a lockdown, well, this is a period where you hardly can retain a customer. This is from our perspective a period which we will manage in a as we did in the last nine months in a very good manner, and we stay confident for 2020 for 2023. Now if we look, and this is leading to your first question. If we look at the development in the two other major geographical areas, U.S. and Europe. Let me start w ith the U.S. environment based on one hand side ongoing very low inventory levels. You might have seen the latest Autodata numbers we have together with one other company. Definitely the lowest discounts as we speak in the U.S. market. Low inventory level, low discounts despite inflation ongoing strong demand, additional capacity from Spartanburg with the X5 and X7. Later in the year, you will have the XM, which of course is also very highly profitable product. U.S. we are definitely confident. In Europe, we see. This is why I referred to it in a little bit more detailed way in my speech. We see a mixed picture. On one hand side, markets like Italy, France to some extent, Spain seem to be more resilient. In Germany and in U.K., we have definitely despite the fact that we have a strong order book, but we have seen incoming orders in the whole industry, including us, moving in the last couple of months because we've already referred to this development back in early August. This is why I would be rather neutral on the development in Europe in the coming months. Within probably slight difference market by market, which has maybe to do also with inflation being a little bit higher in Germany and U.K. compared to some other markets. Growth possible in 2023 without touching discounts? Of course, that's the strategy moving forward. This is why we have a strong focus on supply and demand management on dealer inventories, not only in the U.S. but all around the world. That's definitely an absolute focus we have. When we look, as you can imagine, really week by week at the development of our business, which is top priority. Many thanks. Good. Thank you very much, Patrick Hummel. Next question, please. Thank you. Our next question comes from the line of José Asumendi from JP Morgan. Please go ahead. Your line is now open. Thank you so much. It's José Asumendi from JP Morgan. Hello, Nicolas. A couple of questions, please. I would love to understand a bit better the provisioning in financial services. I know you always take a very cautious approach with these metrics. I would like to understand a bit better the rationale behind that and if this is sort of the new run rate for the coming quarters. The second question, I get a lot of questions on the dividend. I just wanted to confirm that we are discussing a dividend payout ratio based on reported earnings, which obviously this year are very strong and also exceptional due to the Chinese business consolidation. Thank you. Thank you very much, José. Nicolas. Well, first, if we look at the financial services business, on the one hand as I've mentioned, we have seen in line with sales. We have seen new business going down in the course of 2022. Despite this, we have a very high profitability level because you know our strategic target of 14% return on equity, and we are now forecasting 17%-20% return on equity. This has to do on one hand side with the ongoing quality of our business with the fact that also if we look at the sale of off-lease vehicles, we continue to see a strong pricing in all major leasing markets. Finally, if we look at credit risks, as I said, we've on one hand side we don't see any signals at this point in time that our credit risk would increase. On the other hand side, taking into account what we see in terms of inflation, rising interest rates in many markets, we believe it's the right thing to be a little bit more on the careful side, and this is why we've increased provisions in the area of credit risk. Do we see already those signals if we look month after month? No, we don't see those signals. It has more to do with macroeconomic factors. To give you maybe just an idea on the impact of residual values, you can calculate, depending on the car, between EUR 1,000 and EUR 1,500 more profit from resell of off-lease vehicles compared to pre-COVID years. Well, of course, it's a little bit too early to now discuss details on dividend payout. But do we see any reason at this point in time to change our overall long-term strategy? No, we don't see. Okay. Thank you. Good. Thank you very much, José. Next question, please. Thank you. Our next question comes from the line of Stephen Reitman from Société Générale. Please go ahead. Your line is open. Thank you very much, and good afternoon. Again, I'd like to get a bit more clarification on this movement in the margin, and obviously as it relates to the China. Obviously you published very kindly the impact of the China consolidation. I guess then the underlying profit has gone from 12% in Q2 to 10.1% in Q3. As you've told us, the inventory adjustments were done in the first half of the year. This is now just the PPA adjustments which are gonna be going ongoing for some period of time. It does look like there hasn't been the sort of uplift in profitability one might have expected from China in these figures. As you've said, you had a very successful local production now of the X5 in China, and it's making meaningful numbers, 9-10,000 units a month or so as well. Is there some sort of impact holding the profit back, which will be more evident in the coming quarters? Stephen, t hanks. Yeah. No, Nicolas, please. No. Again, if we look at our China business, we have on one hand side similar to as we've outlined for the second quarter, we have volatility in the total market number due to the COVID situation. On the other hand side, we have seen that as soon as COVID restrictions are discontinued in various cities, we have seen the business going up and kicking in again. This is why we are confident that we will see also positive development in 2023, also based on our strong product portfolio. Of course, you will see, as we have started to produce the X5 long version in China in May this year, you will see the full-year impact. That's an important element only in 2023 when we have full-year availability of X5. As we've said, I think in one of our last calls, of course, if you look in the long run, the China consolidation should have an impact, a positive impact on our EBIT in the magnitude of approximately minimum 1%. Thank you. Okay. Stephen, thank you very much. Next question, please. Thank you. Our next question from the line of Philippe Houchois from Jefferies. Please go ahead. Your line is now open. Yes, thank you and good afternoon. My question is going back to financial services, so 'cause when I look at the numbers, you're losing quite a lot of share in that business. You know, I think BMW goes about 51% penetration, now it's 42%. I'm just wondering if two things, though. Is it a competitive situation where, you know, you're losing share to better competitors in China or in the U.S., or if it's kind of a change of strategy and de-risking this business? We all remember that BMW was more affected than most in 2010 with the write-down and the rebasing of the Think Global activities. I'd like to hear from you know, if it's competitive loss of share or a strategy on your end, please. Yeah. Philippe, I believe very good question. It has to do with the fact that we believe the quality also, if we look at financial services, the quality of our business has a top priority. Yes, you're absolutely right. We have seen a slight decline in penetration rate, but we believe that it's more important to put the quality of the margin at financial services, in particular in a situation where we are anyhow in short supply, in particular in the two markets you've referred to, U.S. and China. That's from our perspective. I would not call it a change in strategy because strategy means something which is very long-term. This is definitely the profitability of financial services has a high priority. On top of course it's reducing. There is no need to try to accelerate at any price this penetration in a market environment where, as I said, we are in short supply. Thank you. Okay. Can I ask maybe if I can squeeze another one? I'm sorry to go back to this, but this, there's still this sequential decline in the margin, took me, and I'm sure others by surprise. I hear what you say about China. It feels like there's a shortfall somewhere. Either there's a region that is a shortfall, or there's a product that is a problem or something like this. I wonder if you can shed a bit more light on this and reassure us in a way that this is maybe a one-off and not something that will. 'Cause there is a clear disappointment in the fact that China is not bringing the uplift in the adjusted margin as many of us expected. Yeah. Yep. Actually, no, there is no region or model which is in. No, definitely not. As I said, we've seen higher logistic costs. We've seen higher material costs. We have seen an acceleration, as I've outlined earlier in our EV sales, which I believe and we benefit, if you look at our CO₂ guidance, we benefit from this development. This is definitely a development which we will see the EV development continue with models like the iX1, the i7, the i5 we are launching right now. No, there is no specific region or model. On the contrary, I would say if you look at the distribution across the various regions, probably BMW is one of the best balanced OEMs in the industry. If you look at the development of our model portfolio, we have seen an improvement, as I've said, in mix, which is of course supporting this, the overall strong profitability. Okay, thank you very much, Philippe. The time is running. I think we have time for two more questions. Yes. Next question, please. Our next question comes from the line of Daniel Roeska from Bernstein Research. Please go ahead. Your line is open. Good afternoon, everybody. Maybe then I'll limit myself to one. Could I ask about your local-for-local approach? It seems to be an increasing focus for you and others, and right, it should lead to reduced interdependency between the regions. Would you be prepared to showcase regional profitability at some point? You know, anticipating your answer, in your mind, what is the kind of what's the pro and con for you to talk about regional margins as you go to a more regionalized production approach? Daniel, well, maybe I'm now 31 years in the country, and one of the first major decisions this company took, after a couple of months after I've joined, was the investment in a plant in the U.S. This strategy, local for local, is not something the BMW Group developed in the last couple of months. That's definitely something, a strategy we have always had in our mind, also from an FX management perspective, in order to neutralize FX impact in our cash flows. The result is that you have today a very, very balanced company with a strong footprint, of course, in Europe, the biggest plant in the U.S. and a strong presence in Asia, but in particular in China, where more than 80% of what we sell in China is produced in China. From our perspective, it doesn't make any sense to produce to develop regional margin or profitability aspects. Why? Because we still have that's of course the extremely high relevance. Most of the research and development is done in Munich here next to our headquarters. Of course you can if you look at the mix development region by region you can have a sort of idea which are the most profitable regions. In this context, I have to say we are extremely pleased to see the development which the U.S. have taken in the last couple of years that U.S. really became one of our very of those markets with very high profitability, thanks also to the mix and the fact that we have been able to significantly reduce the discount levels in the last 18-24 months. Good. Thank you very much, Daniel. Now the last question, please. Thank you. Our last question comes from the line of Henning Cosman from Barclays. Please go ahead. Your line is now open. Oh, yes. Thank you for taking my question. I just wanted to come back to the normalization of the order book, please. So I'm still not sure I fully understand what you want us to think about that. Is it almost good that the order book normalizes from an extraordinary high level, and that can still imply growth in unit terms in Europe next year? Or are you trying to suggest with that you may not see growth in Europe or below market growth in Europe? That's the first question. Secondly, again, on the financial services business, I was just wondering if you were prepared to quantify how much in EUR million terms, credit provisions you took in the quarter. When you say you feel adequately provisioned for residual value risks, if you were prepared to quantify what that could mean in terms of how much of a residual value change you could stomach from the provision, f or example, do you envisage residual values to adjust by 5%, for example, year-on-year, and that's what you feel adequately provisioned for? Thank you very much. Henning, maybe let's start with your second question. Additional provision in the low three-digit million euro amount on top for credit risk. But I would again like to underline, we don't see the credit risk rising at this point in time. It's still on a very, very low level historically. Now, normalization of the order book, that's in particular, as I said, an European topic we had from a customer perspective, from a consumer perspective, very long lead times, which probably are a little bit too long if you look from a customer satisfaction level. This is why I would say slight reduction is definitely not negative. It will increase and will support customer satisfaction. Having said this, the strong order book is something which will support our business development at minimum in the first two quarters of 2023, and what is extremely pleasant to see because this is a car which is globally very important, but in particular for Europe, has a high relevance that the X1, including the iX1, we've opened our order books a couple of weeks ago, and demand is really, really strong. Good. Excellent. Thank you very much. Thank you, Henning. Before I close our today's session, we have one update regarding our investor relations team. Nicolas? Well, thanks, Max. Yes, going forward, Adam Sykes, he was previously head of governmental affairs and corporate communications for North America, will take over the role of head of investor relations. Veronika will be assuming another very important management position within the BMW Group's finance division, responsible for payment transactions and the whole global travel management. Those of you based in the U.S. will probably already know Adam. Adam has been with the Group since 2004, working in the U.K., in Germany, in the U.S., broad experience in corporate strategy, brand strategy, and communication. Foremost, I would really like to thank Veronika for the tremendous job in leading our IR investor relations team over the last few years. Extremely well done, and I wish you a great start into your new role. You will all get a chance to meet Adam during our upcoming roadshows and different meetings we have scheduled. Once again, thanks a lot for joining today's conference. From my side also, all the best to Adam, and thank you very much to Veronika. Now we all clap together our hands. Thank you very much, Veronika. Thank you. Nice, ladies and gentlemen. Thank you very much, we see each other. Bye-bye. Thank you. This now concludes our conference call. Thank you all for attending. You may now disconnect your lines.