Welcome to the annual results press conference call 2023 of Mercedes-Benz. At our customers' request, this conference 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 Mercedes-Benz website. The short introduction will be directly followed by a Q&A session. If you have difficulties during this conference, please press zero, followed by the hash key on your telephone keypad for operator assistance. If you want to ask a question after the presentation, please press nine star on your telephone keypad, and you will receive a confirmation that you are now in the queue. To remove this question, please press again nine star on your telephone keypad, and you will hear a noise which confirms the removal from this queue. Please note that dialing nine star a second time during the call will automatically withdraw your question. Please refrain from pressing the key combination multiple times during this call. I would like to remind you that this telephone conference is governed by the safe harbor wording that you will find in our published results documents. Please note that our presentations contain 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. May I now hand over to Steffen Hoffmann, Head of Mercedes-Benz Investor Relations and Treasury? Thank you very much. Good morning, everyone. On behalf of Mercedes-Benz, I'd like to welcome you on both the telephone and the Internet to our annual results conference call 2023. I'm very happy to have with me today, Ola Källenius, our CEO, and Harald Wilhelm, our CFO. You probably all joined our presentation right before. Just as a quick reminder, the respective capital market presentation with all 2023 figures and the outlook for 2024 can be found on our IR website. You may ask your questions now. I will identify the questioner by name. However, please also introduce yourself with the name and the name of the organization that you are representing before asking your question. A few practical points: Please ask the questions in English, and, as a matter of fairness, please try to limit the number of questions to a maximum of two. Before we start, as always, the operator will explain the procedure. Thank you very much. If you want to ask a question, please press nine star on your telephone keypad, and you will receive a confirmation that you are now in the queue. To remove this question, please press nine star on your telephone keypad, and you will hear a noise which confirms the removal from this queue. Please note that dialing nine star a second time during this call will automatically withdraw your question, so please refrain from pressing the key combination multiple times during this call. Again, for a question, please press nine star on your telephone keypad. If you have difficulties raising a question, please try another conference call telephone number indicated in the invitation you received, or press zero and the hash key on your telephone keypad for operator assistance. We start the Q&A. First question goes to Tim Rokossa from Deutsche Bank. Yeah. Thank you very much, gentlemen, and good morning. Tim from Deutsche Bank. Very well done, first of all, on the share buyback program. Harald, you and I, we discussed about the structure for many years now. The number of what you just returned in your market cap is a really strong commitment, so exactly the right message. Secondly, then, two questions, please. Harald, some of those things in the numbers were not so great. The Mercedes margin is now down several quarters in a row. There were fairly high capitalization ratios. The full-year outlook suggests that it's down a little bit, at least over last year at the midpoint, Q1 starting weaker. There are reasons for that, but how confident are you that the 48-volt issue is indeed fixed in Q2? How do you intend to keep prices stable and ultimately turn around the margin development? And then secondly, Ola, this is perhaps for you. You already discussed about the slower-than-expected EV ramp. There's all sorts of reasons for that. Do you expect it to result in a further softening of the regulation? We're already discussing that in the U.S. Do you also see it happening in Europe? And given that your investments now need to stay elevated for a longer period of time, would you also think about partnering up with guys like it's being discussed in the European mass market? Thank you very much. Yeah. Thank you, Tim. So let me get started with the first question on the margin evolution. I think, when we talked about the quarter four for the first time at the end of the quarter three, we said we would expect fourth quarter to be at about the 10%. I think that's what we delivered. However, we also said, I mean, that the fourth quarter should not be a proxy for 2024. And I think with the guidance you heard me today of 10%-12%, that's exactly what it says. If the fourth quarter would be a proxy, we wouldn't not have guided 10%-12%. Well, can we get there? You heard that we have the ambition to keep the pricing stable. The backbone value is obviously the product and the product substance, with a lot of great vehicles in the market and others to come. So that supports it. And overall, our policy is, as you can also see in the sales guidance, that we definitely mean prefer the value over the volume. So here you—I would say you see the response in that. So what else? Third and fourth quarter last year was impacted by charges on supply chain side... on inflation related capacity adjustments, and so forth. We said that, I mean, they basically refer also to the full-year 2023. So, now, I mean, with the raw mats turning and the efficiency efforts, Ola emphasized on the material cost, I mean, at large, we want to gain tailwind on material cost in 2024. So I think all of it, I mean, supports that the fourth quarter with the 10% should not be the proxy. However, one point I alluded to, I would say in the call before or in the presentation before, is the first quarter, the 48-volt, back to your question, it still lasts into the H1. I think operationally, Ola, it's improving, but it's still impacting availability of vehicles and some other issues, I mean, in the first half, in particular, the first quarter. That's why we said the first quarter, I mean, should probably be below Q1 2023 in terms of sales units, which, by the way, was, I think, 490,000 units. So that would suggest that the first quarter, I mean, would be a difficult one. If we look at the ambitions we have, if we look at the cost phasing, I would say the first quarter probably should come in at the lower end of the guidance range for the full-year, but still within the range. Given a pretty low number that in terms of sales, that's an indicator of change, I would say. So definitely we want to restore the margin starting with the Q1, but then obviously with higher volumes in the quarters to come, take it to the level of the guidance range of 10-12. Good morning, Tim. With regard to policymaking supporting or not supporting the EV ramp, it's very, very difficult to make a prediction. You can see that sometimes policymakers make abrupt decisions. Germany, case in point, on a Friday afternoon, the government decided to cut the incentivization for electric vehicles for the following Monday. Pretty unprecedented. To have a firm prediction on what's going to happen there is difficult. I would say this, though, as far as Europe is concerned, there is a review coming up in 2026 that is baked in to the policy decision of going CO2 free in 2035. For a big system like transport and mobility to turn and literally switch energy source, that is a Herculean task. That is a systemic task, an industrial task, and many things need to fall into play for that to happen, not just the product. That's the thing that I'm most confident about, because we're putting our money where our mouth is, and we're investing tens of billions EUR into very attractive electric vehicles coming up, not just us, the industry as a whole. We're also investing into infrastructure. But what the consumers are not going to accept is to limit or lessen their convenience in terms of mobility, and certainly not where it's used for business purposes. So if the enabling factors cannot keep step with the ambition, I'm sure a rational discussion would need to be had to assess are we progressing on the trajectory that we need to go on or are we not? At least as far as Mercedes is concerned, we're doing everything we can to create attractive products, but also to tell our customers, we got your back in investing in infrastructure and other things, working with our supply base and so on, as I mentioned in my speech. But I want to be cautious with predictions here, because it's very difficult to know what the political landscape will look like in a couple of years from now. Thank you. Very clear. Thank you, Tim. We go to London. Next question goes to George Galliers from Goldman. Thank you for taking my questions. I would like to start with a question around the introduction of the MMA platform. In the slide deck, Ola mentioned that it will redefine what customers should expect from an entry point product from Mercedes, which, if the case, should hopefully manifest itself in higher price points. With this in mind, and obviously notwithstanding the economic challenges around xEVs, what do you see as the implications for price mix within Mercedes from the introduction of the MMA platform and the phase out of some of today's entry luxury products? The second question I had was around the free cash flow, which I think takes on much more significance in light of yesterday's announcement. Over the last four years, you've generated more than EUR 35 billion of industrial free cash flow, so a run rate in excess of EUR 8 billion per annum. Obviously, the guidance for this year implies free cash flow again in excess of EUR 8 billion. Clearly, the future is unpredictable and you don't have a crystal ball, but do you think EUR 8 billion is a reasonable kind of the floor to assume for cash flow over the next four years, and hence, should there be potential to generate another EUR 30+ billion over that time frame? Thank you. So George, I'll start with MMA. What we're executing with the MMA platform is what we set out to do. And I think it's really three things that are happening here. On the one hand, we have made a portfolio optimization decision, so we're focusing our portfolio, as you know, from seven models to four models in this segment. We have selected the four models that we believe will perform the best in from a worldwide market perspective. We're significantly elevating the technological substance of our product in that segment, so the customer, compared to the very attractive products that they get today, will get so much more. and we'll have a thoughtful and customer-friendly approach towards the refinement of those products within the segment, to make sure that it is a Mercedes experience through and through. But what we're not going to try to do is to completely leave the segment, because then actually you're doing a C-Class and you're not doing a CLA. So whereas this means a migration or a nudging north inside the segment, we want to stay in the segment, and especially as you can see on the BEV development so far across the world, it has been small and medium that has been the growth factors for BEVs, and this would be our play in the entry side of the medium, if you will. Then followed by MB.EA, which is just, you know, a year behind, with then the electric GLC and the C-Class, and you got to keep those, those product positions apart. So stay within the segment, but, nudge up, in that segment. Yeah, George, on the cash flow, yeah, I think the share buyback or the capital allocation framework is a statement of confidence and continued cash generation. Otherwise, there probably would not have been, I mean, wouldn't have made sense to come out with a framework and the policy of continued share buyback, I mean, over time. But well, without giving a guarantee on cash generation moving forward, but let's go back to basics. What makes a cash flow? It's a margin, right? So I mean, here you have, I mean, pretty good indication for the margin in 2024 with the product portfolio now and to come 25, 26. I think we feel very good to defend a market position with the substance of the product, I mean, at the pricing level, I mean, we mentioned shortly before in Tim's question. So definitely, all in all, with the cost focus, we have the objective, I mean, to protect margin moving forward. Second point on the cash flow, obviously, is investment side of things. We're doing a lot on the investment side, but we have a very, very clear view of the portfolio in which we are investing. We have to invest, and I mean, that number, I mean, doesn't go through the roof. We set ourselves caps. I reiterated the point on the investment adjustment over time, maybe a bit longer in the second half of the decade, but not going through the roof. And on the working capital side, I think you can see that there's a good level of discipline to manage working capital, so that in essence, working capital, I mean, isn't a drain on cash flow too much. That means cash conversion targets, I do see them in the range of 0.8-1, not only I would say for 2024, but moving forward. For the van side, given the step up and the longer life cycle investment on the van, at 0.6-0.8 for a few years, I mean, to come, probably mid-2026, 2027, until I mean the vehicle, I mean, will hit the market, but then a pretty good potential to come back to higher level cash conversion ratios. And I think that should frame your thoughts on the size and the stability of cash generation moving forward, which will then fuel, obviously, the share buyback potential after divvy. But maybe there are some opportunities also. Well, some might think about M&A. You know that at least on my side, I'm not a big fan of large-scale M&A, but maybe M&A also consists of not only acquisitions, but the divestitures. And over time, that means, I mean, we could consider after the lockup period to divest from the Daimler Truck stake. I said, I mean, we could, and didn't say we do, but we could. Obviously, that would support the free cash flow, and take it to even to a higher level on which then the new policy would apply. So I hope that answers your perspectives on future cash flows. Very helpful. Thank you. Thanks, George. We stay in London, continue with Daniel Roeska from Bernstein. Good morning, gentlemen. I'll go back to the ICE and BEV questions. Would you expect your market shares in combustion engine and electric vehicles ultimately to approach similar levels, kind of independently of the BEV share in the market, isolating yourself a bit from that progression. And if your market shares in BEV would be lower than in ICE, what conclusions should investors take from that? And then secondly, what does it take to bring some of the product excitement you have around MB.EA to the combustion engine side? If you think about combustion engine cars in the 2030s, will you need a new platform, or at least a refresh on the ICE side? Kind of what do you need to do, kind of to bring MB.OS some of the design language you have now over back to the combustion engine side? Thanks. Daniel, good morning. If you look at the development of BEV market shares as a percentage of the total car market up until this point, it is evident that the highest share, it's kind of coming from below, going up, and not the other way around in the segments. Much of which is driven by policymaking in China and the dynamics of the Chinese market, where a lot of small to medium is where the BEV action is. On large, if we take our EQE and EQS right now, actually, we have a pretty good market share. It's just that the market is not that big yet, and that many customers in that segment, they view the S-Class and the sibling cars as kind of the non plus ultra that they want to have, and we don't mind. Now, if we look at the timing of our launches, we start launching next year, the CLA, and it's one of four, as I mentioned before. So over the coming then about 24-30 months, there will be a family of cars there, that then becomes the entry point for Mercedes, and followed up by, which is probably in premium luxury, the biggest segment, C-Class and GLC, and we will launch those products in 2026. So we come into, in terms of meeting the market and the market structure, as you can see it today, we come into a full swing then, by the year 2027. So we have not made any plans for any artificial market shares, lower or higher, on ICE or BEV. We want to exploit in a value over volume approach, as Harold mentioned, the maximum potential for those products. When it comes then to the ICE siblings, I think it's also key here, and I tried to portray that in my presentation just before, that if you walk into a Mercedes showroom, you expect the Mercedes to be a Mercedes, to be a Mercedes, and maybe don't think so much about if it's BEV or an ICE. The technologies that we're developing now on MB.OS, next generation driving assistance systems, next generation infotainment, and I don't know if you have driven the new E-Class, and I know I'm ever so slightly biased, but I haven't found a car that has a more exciting infotainment offering than that car. I don't think our ICE customers long- term would accept if that is like a, then when the next gen comes, a BEV story only. And the E-Class is, of course, a combustion-based vehicle, so we're gonna have to cross-breed between the two as we go along. Do we need a complete new architecture, as in, ripping up the playbook and starting from fresh, on the combustion side? No, I don't. And the reason why I don't believe that is twofold. On the one hand, through EU7, China7, and the, emissions laws in the United States, primarily California, we are updating all of our relevant ICE powertrain combinations for the 2027 timeframe. So it's almost like we will have a whole new fresh lineup in 2027 that can carry us well into the 2030s. And we're also, together with our partner, developing a brand-new entry-level four-cylinder engine that will also about 9 months or so, maybe 12 months or so, after the electric vehicle on MMA, also be a very competitive, good hybrid powertrain that is literally brand new than starting, whatever, 2026 and forward. So we got the powertrain lineup, and we have the infrastructure to continue to produce. And our architecture then on the larger vehicles that we call inside the company, MRA2, it's literally brand new. The E-Class sits on that architecture. We believe that we can, with the technologies that we're developing, use that to underpin any and every update that we would need to do to those vehicles along the way on that journey into the 2030s. If we need to do more on the optical side, at the right time, we will do so. So if we think about the upcoming C-Class on MB.EA, kind of is the thesis that the MRA2 could support kind of a similar or kind of equivalent combustion engine version, right? Because the MB.EA C-Class is distinctive in its own way. That is true, as is the combustion version of the C-Class and the GLC, which is actually our best seller. But stay tuned, Daniel, and you'll see what we have up our sleeve. All right. I will. Thanks. Thanks, Daniel, and we continue with Patrick Hummel from UBS. Yeah, thank you. Good morning, gentlemen. First of all, congratulations to your capital allocation policy decisions. I really think that's benchmark for the industry. My question relates to an update on the medium-term plan that you had laid out at the Economics of Desire CMD, and before, already, when it comes to the, you know, investment budget, the fixed cost, et cetera. Correct me if I'm wrong, or if you think I will be wrong, that the volume assumptions you took for core, for the core segment, core luxury segment look a little bit ambitious from today's perspective for a 2025 perspective. So can you just, first of all, give us an update on, on how you think about, you know, the three buckets, entry, core, and top end with a, with a medium-term view, now that the reality has, deviated probably slightly from the plans laid out back then? And what is the conclusion, of maybe the core, segment being a little bit smaller than, expected a couple of years back when it comes to CapEx, or investment overall, including R&D, and the fixed cost side of the business? If you could just update us on those building blocks, because that all feeds into the free cash generation of the business, of course. Thank you. Yeah, thank you for that question, Patrick. Let me start with kind of the composition of the pyramid or the diamond that we showed. We kind of ran up on the top-end level to the percentage a little bit quicker than we thought. And you're right, that the core side did not grow as fast as I talked about two years ago, although some of that is product and launch related, as we have discussed. So our two main products, the GLC and the E-Class, in that core segment, well, one is in full launch now, so we're in switchover, that's the E-Class. And the other one was indeed restricted in the second half and into this year, as has been discussed. So I think that in terms of the relative importance inside that segmentation, we're looking at a little bit of a comeback of core. And then we will, as described before with MMA, carefully manage the entry side. So I think the composition of the pyramid or of the diamond is pretty solid, and we're following what we had said. But then you look at the macro environment and the market, and I think you have to ride the market. And we have, in as disciplined a way as possible, always tried to find the right equilibrium between pricing, protecting value, protecting residual values for our customers, as well as volume. And coming out of this restricted era there with the semiconductors and everything, the macroeconomic and the market conditions are different now than perhaps some people had thought. So you also have to ride the macro market, and that is where we just try to adjust volume to what the market supports. So maybe in absolute numbers, we're a little bit behind, but in the composition, I think we are doing reasonably well. In particular, I think at the top end with 16%, we said we want to get there over time, and actually, we are there. 2022, 2023. Let's bear in mind as well that, I mean, the top end obviously has a few of the best as well, which are developing at a bit of a slower pace compared to the expectation, maybe back at the point in time in the spring 2022. On your question, what does it mean for fixed cost and investments, Patrick? Well, the fixed cost are the fixed cost, would say almost no matter what happens around. So we don't see that as a percentage of revenue. No, it's an absolute number we're driving year on year down, with a 16% down, by 2023. I mean, you can see that. So we're not that far off, I would say, of the 20%, which we ambition for 2025. So on track to deliver that, and, we're not stopping then in 2025. Definitely, we have the ambition, I mean, to keep going, with each and every efficiency possible in each and every department. On the investment side, compared to, to what we said at the point in time, 20% down compared to 2019 by the middle of the decade, we added definitely, portfolio positions, AMG, MB.EA, portfolio on MMA, and, MB.OS. So I think that is running at a higher level. And you see exactly, I mean, as at the same time, the increase of the BEV share doesn't go maybe exactly in line with the previous predictions. We stick to the investments on this side, very, very important, but we have a very precise view of the portfolio, what needs to be done, and that fits in the envelope, and I mentioned before in George's question. But with the 20% of the cash, of the investments down, sitting more in the second half of the decade, as Ola said before, when we need to use tactical flexibility, I mean, on the ICE side. But the BEV investment profile for us is pretty clear, and we see definitely, I mean, the potential for the investments, I mean, to come down over time. So confirmed, not for 2025, but for the second half of the decade. Thank you, both. Thanks, Patrick, and next gentleman in line is José Asumendi from JP Morgan. Thank you very much, and good morning, and congratulations on the capital allocation program. Two questions, please. Harald, can you discuss with regards to the guidance on the auto margin for 2024, what are the planning assumptions in the Chinese market when it comes to volume and earnings contribution from the region? And second, Ola, can you talk a little bit about the plan to hit the CO2 emission targets in Europe? And can you maybe comment around the share of BEV that you're planning in 2024 and 2025? Thank you. Yeah, thanks, José. So overall, I mean, as we said before, we take a prudent view on sales in 2024. Supply constraints are still being there, in particular, I mean, in the H1 and the Q1, as I emphasized in the first question. That has an impact, but I mean, beyond that, we also take a prudent view given the macro environment, and obviously, I mean, in the very heated BEV competition, I mean, in China, where we participate, but not by all means, and therefore, I would say all in all, for China, within the sales flat guidance, China is also rather flattish, I mean, in there, such as Europe is, and maybe a bit of upside potential, I mean, from the U.S., and maybe flat or slightly down in the remainder of the world. So I think that is how the sales guidance is composed. With regard to CO2 guidance for Europe, you could see the chart in the presentation. So, the backbone of it is obviously the xEV share. We will continue to build the xEV share. We're now changing smart. So smart used to sit inside Mercedes, obviously from a legal entity point of view, now that is entered into the pot, via the joint venture that we formed some years ago. So you have a method change there. As I described before, we launched the CLA in 2025, and really get kind of the bulk of the vehicles in, 2026 and 2027. So if I, if I look at that midterm run up of the xEV share, that looks healthy in the course over year 2025 and into 2026. I'm sure, we'll look carefully at that, and it will be underpinned by xEV share. Should we have to use other options above that, we will keep an open mind, but it is growth of xEV share that, that ultimately solves that issue. Thank you, José, and we continue with Stephen Reitman from Société Générale. Hello? Stephen, can you hear us? I can hear you, yes. Yeah, we can. Okay. Yeah, yeah. All good. Thank you very much. Thank you. I had three questions, please. You highlighted logistics as being one of the headwinds you've had in 2023, which I think is seen generally across the industry. But we are seeing logistics costs falling quite dramatically, particularly in terms of shipping. How do you see that in terms of influencing your bridge in 2024? Could you also comment on, you know, first of all, now on the agency model, now we've had a year of it in the U.K. and half a year in Germany, doing to transaction prices. And thirdly, you showed us obviously the sort of the seat preview of the facelift of the EQS, which is obviously, you said is much more than a facelift, it's a very substantial refresh of the vehicle. A styling of the vehicle, is that which is the more, which it seems to suggest a more traditional approach on the front end, is that a, is that an option, or is that the way that all the vehicles will look? And also, could you give us some idea on the timing of the customer deliveries of that vehicle? Thank you. Yeah, Stephen, to your first question in terms of the headwinds, yeah, I mean, the previous years, logistics costs would have been definitely a headwind in the course of 2023. You can see overall the logistics costs, I mean, have been turning and coming the other way. I mean, next to the cost per unit on the logistics, I mean, we're obviously trying as well, I mean, to challenge and improve the overall demand side of the logistics side, or in particular, I mean, if you think about outbound. At this stage as we speak, however, I mean, some of the geopolitical constraints like the Red Sea may get, but obviously ships are going a bit longer. Longer means more expensive, so temporarily maybe a bit of a headwind, but globally, we're trying to take, I mean, all opportunities also from tailwind, I mean, on logistics in 2024. On the Model D and the benefit on transaction pricing, well, in the meantime, quite a lot of markets which we switched, right? I mean, starting with Sweden, South Africa, Australia, Austria, and now 2023, obviously, U.K. and Germany, and if we look into each and every of these markets, what we can observe is when we compare basically the pricing, the discounting in the situation before compared to, I mean, the after, there is a net pricing benefit. That varies quite a lot in the individual markets. I mean, therefore, it is, it's not very meaningful to give any number here, but obviously it helped the pricing performance, which again, was significantly positive in 2023, as you can see in the margin bridge on cars. And by the way, same thing on the van side, which is also, I mean, supporting the pricing. And for what is yet to come, I mean, we do expect the same thing. Obviously, inter-brand competition goes away, transparency, and all in all, we therefore see that as a favorable support to the pricing strategy. With regard to the model year update on the EQS, not just the star on the hood and that more traditional Mercedes-like panel in the front, but the executive seating, the new battery chemistry, some of the other measures that we have taken to improve efficiency and improve range, that will be available in the market as of June. Actually, we're sneaking in the battery, we're actually sneaking in the battery update before that, but as a complete package, it's available in the market in June. Starting in Europe, obviously, and then you have some shipping times. And if I look at the feedback that we receive from our customers, from the EQS and the EQE around the world, it is some of the highest customer satisfaction scores we have anywhere. Actually, a little over a year ago, when J.D. Power did a study in China, actually, we scored the highest of any brand, any vehicle. So the people that drive these vehicles, they love it. Some of them want to keep the more sporty look and have the star integrated in the panel, and some we believe will want to have the more traditional look. So you will be able to get both. If you sit in the back, you can still order the regular backseat, but this executive seating is then also available of June. I'm 195 tall. I sit in the back of an EQS. I can sit there very comfortably. Thank you. Bye. Thanks, Stephen. We continue with Horst Schneider from Bank of America. Yes, good morning. Can you hear me? Loud and clear. Okay, excellent. First question again on pricing, because it seems to me that surprisingly, pricing has got stronger in Q4, even versus Q3. So Horald, can you maybe explain what has driven that? And with the assumption for 2024, that you aim prices to hold up, can you provide a little bit color by region, by segment? Because I think not everything is up or stable. Some things will be down, some things will be up. What are the drivers? And does now basically stable pricing means and value over volume means that you rather focus from here, really not any more on market shares, or that you, that we should expect basically market share losses also beyond 2024? And the last one is on Ola, regarding BEV price policy. We see in the mass market at the moment that basically BEV prices get down to a level where also the ICE prices are. I think that is not yet the case in the premium market. What is your working assumption, basically, on pricing going forward on BEVs, when you expect BEV prices to go down to ICE level, also in the premium market, or you expect that at all ever to happen? Thank you. Yeah. Thanks, Horst. So on the first one, on pricing, no, I think it said in the presentation earlier today, full-year pricing was healthy, was solid. I think in the previous quarters, we gave some color on what is the pricing in itself, I mean, in the bucket. I think we reached a bit, I mean, the limits, as I see what other people are doing. I'm happy to comment on a qualitative basis. And that means in the fourth quarter, pricing quarter-over-quarter 4 2023 over 4 2022 was still positive. But I would not say that, I mean, quarter 4, in terms of pricing, was sitting above quarter 3 2023, yeah? But full-year, and year-over-year, even fourth quarter was very supportive, as you can see in the margin bridge. Looking into 2024, I mean, we said we have the target, we have the ambition to keep pricing stable. Stable, I mean, obviously means flattish. Do we think we can get there? I mean, number one, as you know, pricing is composed of several elements, discount management, base pricing and escalation. So we'll work on all levers. We'll keep flexibility, obviously, on discounting to stay competitive in the market, but not to the extent that we want to buy market, that we want to buy share, as some others, I mean, might do. That is not our policy. Again, value over volume, I mean, applies. We think market share should be defended by product substance and not necessarily by aggressive pricing measures and actions, that's probably the latter one, are not sustainable, whereas the product substance is sustainable. But, Harald, that means that you have got in your guidance also a range included, right? So upper end of the range could be then, like, flat, and the lower end of the range would mean negative pricing. Is that correct? Well, within the guidance, you have many building blocks. So, pricing is one, obviously. I mean, the material cost is one, logistics, we talked about before. So, many things, we look at, and then we take a judged view as, and, and then obviously we build from there, I mean, the guidance range. And as I said before, it's 10-12, which means Q4 is not the proxy for 2024. Yeah. Okay. Thank you. With regard to the BEV pricing policy going forward, if you look at those, MMA and MB.EA vehicle, and so on, going forward, we think, first of all, that we're putting attractive and competitive vehicles into the market. So of course, we want to exploit that. If you then look at what should be the premium on a like for like, from a combustion to a BEV, and it is true, and I mentioned it in my speech, that the variable cost of the like for like electric vehicle is higher than the ICEs. So in those business cases, we're assuming a moderate price differential, where I don't think we're going to be too aggressive or too optimistic, but we do assume that, we can, have a price differential going forward. From a total cost of ownership point of view, for the customer, mind you, that for them, over time, the cost of energy, fueling up with electricity as opposed to gasoline or diesel, and so on and so forth, and depending on which market that you're in, taxation, et cetera, you know, some of that comes back. The total cost of ownership differential might be much smaller, and in some cases, it might be the same. Yeah. Okay, that's great. Thank you. Thanks, Horst. We continue with Michael Raab from Kepler. Yeah, hi, gentlemen. Mike Raab from Kepler Cheuvreux. When you just said that you want to keep flexibility in your discount management, I guess, the key question is, where is the fine line to walk on, or the line of discrimination beyond which you're compromising your value of a volume strategy? I guess what I'm out for is, to what extent are you willing to ratchet up discounts here? And then secondly, when it comes to BEV pricing or the general competitive framework for BEVs, are you still happy with your residual values, or have you already seen impacts on the RVs so far? Thank you. Yeah, thanks, Mike. Just to answer on the second question, for sure, I mean, we look at the residuals and any exposure, and obviously, not only us, but our external auditors. This is being done at each and every quarterly close, and any charge which would need to be taken, I mean, would sit in the books. Obviously, we have been going through the procedures, even if the audit is not ultimately completed, but I have no indication, I mean, that there would be a change to that. And there is not any material, I mean, adjustment in the books and records for EVs in the 2023 numbers, which we published. On flex discounting, I think it's a bit difficult to give a general statement. You need to look at, I mean, obviously, the individual product segments. You need to look at the individual markets, and the timing of the products, I mean, in the market, the life cycles. Obviously, you look at what is the margin contribution of the individual ones, and this is, I think, I mean, tactical day-by-day job, I mean, of the sales team in close cooperation, obviously, with a few finance guys looking over the shoulder. And the end result you see basically then in the quarterly bridges, I mean, again, where we give, I think, a lot of details in terms of, I mean, the bucket volume, mix and pricing. But the three levers, I think, are important to be seen in conjunction. Product-based pricing, which is going with the product substance, escalation updates year-on-year, and discounting. And again, on discounting is probably, I mean, the flex tool, in a competitive market environment. All right. Thank you. Thank you, Michael. We continue with Michael Tyndall from HSBC. Morning, gents. Thanks for taking my questions. Just a couple, if I may. Just thinking about the slight change to strategy in terms of xEVs versus previous ambition, and just in 2023, it felt as if there was a penalty from your supplier side because you didn't quite achieve the level of volumes that you were aiming for. So I'm wondering to what degree you've got a flexibility with your suppliers if it turns out that BEV penetration is lower than you previously thought. Has that changed at all, such that perhaps what happened in 2023 won't happen again? And then the second question is on capitalization. I just wonder if you could talk a little bit what's inside that. I'm curious to know whether or not MB.OS is inside that, and does... If it is, does the rise in capitalization sort of suggest that you are getting closer to the point of saying, "We're ready to go on that?" Thanks. Yeah, thanks, Mike. So, on the first point, I mean, we're not commenting on individual contractual relations, I mean, with the suppliers. But, when we talk about supply chain related charges, inflation related and capacity adjustment related charges, in 2023, a lower, I mean, EV adoption rate, I mean, plays somehow a role in it. I think that is fair to say. And, I'm pretty sure that applies not only to us, but to other market participants, as well. However, I mean, in the discussions, I think, I mean, we can go as far as saying that one, we take at our end, I mean, a longer term view in terms of the supply relationship. And, I mean, that, that doesn't go for 12 months, that goes for the product life cycle, that goes for multiple products, that goes, over many, many years. And, so we want to have constructive relationship and discussion with the suppliers, which means, I mean, if, there are charges to be considered, I mean, we, we are ready to do so. If we feel that it goes beyond and other elements are sneaked in, we'll push back hard, and we'll consider in the overall relationship with suppliers, with respective consequences, I mean, over, over time. On the second question, capitalization rate, yeah, went up in the, in, in the fourth quarter. I mean, how comes? Several elements. Yes, absolutely. We are approaching maturity on MB.OS, as Ola said earlier, however, not a walk in the park and, still I mean, a lot of things which need to be done. But as vehicles are on the street, are being tested, features are coming up, I mean, that is encouraging progress. What else is in there? I mean, lots of products in the pipeline, MMA, obviously, MB.EA, AMG.EA, also lots of stuff, and, another newcomer to another, I mean, kid in town, on the capitalization is the electric G-Class. Well, I mean, as per the IFRS rules, you, you're- you don't have the choice, you have to capitalize if you have a product which is supposed to generate value, i.e., you earn more than your cost of capital. And with all of this stuff, this is very much the case. So, in this respect, I have to say, capitalization in 2023 and in the fourth quarter has not been a function of helping the EBIT. It is a function of value creation ahead for the future. And probably will stay at an elevated level and also in 2024, around that level as we had it in 2023. Got it. Thank you very much. Thanks, Mike. We continue with Henning Cosman from Barclays. Yeah, good morning. Thank you for taking the question. I have a slightly longer one and a shorter one. The longer one is around the volume dynamics. So you're guiding flat volumes. You said you missed about 100,000 units last year. I appreciate it's not all coming back immediately. You're looking more for the second half, but if you would take out the hundred, it almost implies you're guiding down 50-100, everything else equal. So I just wanted to understand that, why you wouldn't expect that to fully come back? And then related to that, from an EBIT perspective, not to go over all the individual again, but I guess, you know, in my estimate, maybe you're missing out on EUR 1.5 billion in EBIT or so because of the 100,000-unit follow that... percent or so, which is obviously quite a to what you're getting now. You could just comment on how you see the structural margin potential here. You said 10% is for this year. Would you then, in the context of the ongoing, also say 10%-12% is my proxy for going forward? So that's the first question, basically. And the second one, much shorter for in the- Henning, Henning, we are about to lose you. So if you have any chance to get closer to a window or so, it would be helpful. We almost cannot hear you. Is that better now, Steffen? Can you let me know? Yeah. Yep. Yeah, sorry about that. So the second much shorter one was just on the dividend. Thanks for saying, there's upside potential, given the buyback. Would you be prepared to say it's fair to assume in absolute terms, a stable or rising dividend from here, even if it would mean exceeding a 40% payout ratio? Yeah. So thanks, Henning. Let me try to cover, I mean, the multiple questions within. The question number one, well, I don't think you can take the approximately 100,000 units which we lost, so to say, in 2023 and nail them on top in 2024. There's probably you cannot demonstrate that the customers have been saying, "Okay, thank you, I wait another eight or nine or 12 months, and by the way, I don't know for how long I have to wait." And therefore, you nail them on top in 2024. I think that's not, I mean, the way it works. So probably you need to assume that, I mean, the lion's share of the 100,000, I mean, you lost and will not recoup in 2024. And therefore, I think you heard when we said, I mean, we take a prudent view on 2024. It's still constrained by supply in the first half. I think everything has been said in this regard, I would say. I'm not totally sure on your margin question, and the, I mean, the margin associated obviously to the approximately 100,000 units is a pretty substantial meaningful amount, but I stay away from commenting how much, I mean, that is. On the EV margin, I'm not exactly sure, as, I mean, the line was cut out a bit. But in terms of the quality of the EV margin, what can we say at this juncture? You know, definitely it's sitting below the ICE. We also had to take adjustments. You know, it started somehow in fall 2022, I mean, with some repositioning in China. We took some further action in 2023, to stay in the ballpark, to stay competitive. But we're definitely not going as far as other competitors in terms of trying to push the EV products into the market, by all means. So in other words, I would say we defined, I mean, the line in the sand, the boundaries, which obviously fit into the objectives, the overall financial objectives. 12%-14% we said for 2023, we made 12.4, and that is the same now, what we baked into for, I mean, 2024. And maybe I go as far as saying, I mean, that the margin contribution, I mean, of the EVs is positive. And if you think about, I mean, contribution margin, not EBIT margin, but contribution margin, i.e., margin per unit, I can say that this is double digit. On the divvy question, well, I'm not making projections on the future dividends as such, but as you can see with the divvy proposal of EUR 5.30, the share buyback accretion offers DPS upside potential of approximately, I mean, 2%, if you compare to the EUR 5.20 at ISO net profit. Now, completing the remaining EUR 2 billion in 2024, adding the EUR 3 billion until May Q2 2025, that should suggest, I mean, a further accretion potential on EPS and also on DPS, assuming, I mean, or if you depart from the same level, obviously, I mean, with the guidance, you need to factor in probably a bit of a lower EPS and DPS as well. But therefore, the share buyback definitely serves as a stabilizing and upside potential for EPS and DPS. Thank you, Harald. Sorry for the bad line. Thank you, Henning. The last question goes to Harald Hendrikse from Citigroup. Thank you so much for taking my question. Again, congratulations. I'm very happy you've done this, on the cash side, not least because it will obviously compete with, some other investments and stuff that we, we've looked at historically. Just one really quick question. I'll keep it to just one. Can you just talk a little bit more about China? Porsche has been very vocal about top end in China. Yourselves, you know, the Chinese market clearly has been more difficult. So can we talk about, you know, overall China demand, how you see that developing? It feels like, you know, German market share is definitely under pressure now, even with your brands. And then secondly, given tariffs and stuff may come up again this year, you know, what are we thinking about, you know, China as a production base if we do have spare capacity? I think we're all looking to make EVs for the global market from China. Is that viable, and how are you looking at in terms of future investments and stuff? Thank you very much. Yeah, thank you, Harald. As you could see, in 2023, we had a solid year in China, in spite of the fact that the Chinese market did not develop the dynamics that many people had hoped. Yeah ... post the pandemic. And we take a prudent view. Harald alluded to it before for 2024. So we're not gonna put overoptimism into China, but we are launching now the new E-Class, which is, you know, one of the core models there, and it's industrialized in China. So that will once we've ramped that volume, I would say latest by Q2, will give us some momentum. So China, as is the case with its economy, it's more going sideways than it's going upwards. There is high level of competitive intensity in the EV market, much of which is, of course, below the segments that we're generally represented in. And we're gonna try to stay as disciplined as possible, not to be sucked into those dynamics, and then might flex with the volumes instead. With regard to potential protectionism and the discussion that is going on between the EU and China, I think we have stated our position very, very clearly. Any move by the EU or other party to raise protectionism is a value destruction move, especially for an economic region like Europe and Germany that is a big exporter. So we're participating in that study and making our opinion very, very clear. Okay. Thank you very much. Thank you. Thanks, Harald. With that, ladies and gentlemen, thank you very much for your questions, for being with us today. Thanks a lot to Ola and Harald, for answering the questions. As always, IR remains at your disposal. Before I close today's call, I'd like to remind you of our upcoming Mercedes-Benz ESG conference, which will take place virtually on March 20. There, we'll provide you an update on the progress and the achievements in the relevant fields of E, S, and G. Stay tuned. Now to all of you, have a great morning, great afternoon, or great evening. Thank you and goodbye.