Q3 2015 Renault SA Corporate Sales Call
Oct 29, 2015 AM CET
RNO.PA - Renault SA
Q3 2015 Renault SA Corporate Sales Call
Oct 29, 2015 / 05:00PM GMT
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Corporate Participants
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* Thierry Huon
Renault SA - Director of Investor Relations
* Dominique Thormann
Renault SA - CFO
* Jerome Stoll
Renault SA - Chief Performance Officer
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Conference Call Participants
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* Thomas Besson
Kepler Cheuvreux - Analyst
* Charles Winston
Redburn Partners - Analyst
* Gaetan Toulemonde
Deutsche Bank - Analyst
* Horst Schneider
HSBC - Analyst
* Philippe Barrier
Societe Generale - Analyst
* Fraser Hill
BofA Merrill Lynch - Analyst
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Presentation
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Operator [1]
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Ladies and gentlemen, welcome to the third quarter 2015 financial results conference call. I now hand over to Mr. Huon. Sir, please go ahead.
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Thierry Huon, Renault SA - Director of Investor Relations [2]
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Good evening, everyone. Welcome to Renault's third quarter 2015 conference call, broadcast live and in replay versions on our website. The presentation file and press release for these calls are all available on our website in the Finance section.
I would like to point out the disclaimer on slide 2 of this pack, regarding the information contained within this document, and in particular about forward-looking statements. I invite all participants to read this.
Today's call is scheduled to last about 45 minutes. As usual, we have two speakers this evening, Jerome Stoll, EVP and Chief Performance Officer; and Dominique Thormann, EVP and Chief Financial Officer. Their presentation will last about 20 minutes and will be followed by a Q&A session.
If we don't have the time to take everyone's question in this session, [Clementine, Nicola] and myself will be around to take your calls later. Without further ado, I will pass the call over to Dominique for a few opening remarks.
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Dominique Thormann, Renault SA - CFO [3]
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Thank you, Thierry. And good evening, everybody. Before reviewing commercial results with Jerome in a minute, I would like to highlight the key takeaways from the third quarter. Car markets remain very much contrasted in Q3. The European recovery continued to gain traction. But emerging markets remained adverse and volatile.
In Europe we are pleased with the performance of our new products, Kadjar and Espace. Even if this is not yet fully visible in our registrations because of the production ramp-up and some supply constraints, sales are promising at this early stage of the complete renewal of our C and D segments. Jerome will tell you more about that in a second.
Outside of Europe we're still facing a difficult environment in our main international markets, as demand and currencies became strong headwinds during the summer. We are doing our best to adjust our cost structure and our prices, so as to limit the negative impact of this environment on our performance.
Last but not least, our business with partners remained a solid pillar of our revenue growth. Given this overall context, we're confirming this evening our guidance for the full year. I will now pass over the call to Jerome, who will review our quarterly commercial performance before taking you through our financials. Jerome?
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Jerome Stoll, Renault SA - Chief Performance Officer [4]
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Yes, thank you, Dominique. And good evening, everyone. So I will start my presentation on slide 6, with market trends for the third quarter compared to the same period last year, globally and for each region. The global TIV was minus 0.2% down with significant slowdowns in all overseas regions, compensated by a more-than-expected growing European market.
The European market kept growing over the period with a 9.8% rise, with a buoyant Southern Europe TIV. In this context, the French market is up by 5.7%, confirming its positive H1 2015 trend.
In the overseas region, the trend is just the opposite, with two major crises affecting Russia and Brazil. In this respect, Eurasia and Americas suffer falls 13.9% and 12.5%, respectively, directly linked to the troubled economic or political situation of their key countries.
In Eurasia, a booming Turkish market could not compensate a sloping Russian TIV. In Africa-Middle East-India, AMI region, Algeria drifted by nearly 50% in Q3 due to a regulation evolution that limited imports. This drift explains most of the 6.6% TIV decrease, as other markets were steady or positive.
Asia Pacific TIV was also down 2.3%, mainly due to China down for minus 2.4% and minus 20% on the CBU market, which affects us more. Also South Korea had a good 12.5% growth.
We can now go to slide 7 to have a look at the group registrations. In this global market decrease of 0.2%, Renault registrations increased by 1.2% with, let's say, a steady-plus global market share at 3%. The group increased its volumes in Europe. However, fewer registrations were made in all overseas regions. As you can see, Europe has more than compensated overseas sales decrease.
You can see on slide 8 that according to the global TIV mix evolution our European sales have increased by 52% to 55%. This demonstrates our ability to grasp the opportunities where they are sitting. And they are in Europe today. As one says, fish where the fish are.
Now let's focus on the chart representing the group market share in its top-10 countries which account for about 70% of the total sales. Our top-10 ranking is well balanced with European and overseas countries, converging to a steady global market share.
Now we'll detail our performance in each region. Let's begin with slide 9 with Europe. Europe grew for the ninth quarter in a row. Our sales have increased by 20,800 units. Also our group market share has decreased by 0.3 points at 9%. The Renault market share is steady, whilst (inaudible) market is decreasing by [0.3] point.
This result is quite deceptive compared to H1 figures. But this is mainly a seasonal effect, as our order bank is worth 1.6 months more than 44,000 above last year level. It is supported by good, new model launches during the summer period.
The Renault brand remains the leader of the small and (inaudible) cars, A and B Segment, with the success of Clio, second-best seller in Europe; and Captur, number-one in its segment. The group market share went down 1.4 points in France over the summer, despite good order intakes, mainly because of supply constraints, which should be addressed during the last quarter.
Slide 10 in Europe, I'll profile life cycle with the C segment end of life is not favorable. However, our new models are on the right track. Espace, for example, is doing extremely well with 19,000 orders. You will appreciate that the high-model mix really higher than expected, with 15% initial derivative, leads to a EUR4,700 net revenue increase versus former Espace, and plus 9 points on resale value versus the same former Espace.
Compared to Renault range average, this is a EUR15,400 net revenue increase, and a 4.9 point on resale value.
It is very much the same story with Kadjar. 37,000 orders at the end of September, plus EUR3,700 net income compared to Scenic, and plus 11.7 points on the resale value. And compared to the Renault range average, this is plus EUR6,600 net income, and plus 8.6 points on resale value. As you understand, we feel confident with all our last new model launches.
In Eurasia, slide 11, Renault could grasp the Turkish market opportunity. The market is 23.5% up, but Renault registration are 31.6% up. To explanation for this strong performance, first, Kadjar's success, already 15% of the segment; and second, a strong order bank at the beginning of the quarter.
In Russia we have decided to protect our profitability. We have increased our price list to follow the ruble devaluation, and we have led the market in this respect, even if our market share slightly decreased by half a point. Overall, nevertheless, in the Eurasia region, our market share is increasing.
In the AMI region, Africa-Middle East-India, slide 12, we gain 0.1 point of market share in a decreasing market. The main market event in the AMI region has been the Algerian regulation evolution on imported vehicles. It has caused a nearly 50% TIV downfall. Our local production of Renault Symbol in Oran has allowed us to strengthen our market share at 34%. Renault remains obviously the number-one brand by far in Algeria.
It is a different story in India. Our market share has decreased by 0.7 points, and our sales by 4,800 units. Lodgy launch has not produced the expected results, whilst Duster is already aging. However the Kwid order take is already outstanding, around 50,000 bookings with down payment, and we feel confident regarding this strategic launch.
In the Americas, slide 13, our market share was up half a point at 6.8% in a 12.5% decreasing TIV with strong contrast. The main headwind is in Brazil, TIV minus 25%, but (inaudible) success has allowed Renault to increase their market share at 7.4%. The main tailwind was obviously in Argentina, where the TIV recovered 3.5%, Renault gained 2.6 point market share whilst optimizing its profitable in a very uncertain environment.
Along with Argentina and Brazil, Renault has also improved its market share in its main Latin American countries, Colombia and Chile.
Let's reach to Asia Pacific on slide 14, our market share is steady. The two core countries of this region are China and Korea, and two different stories. First Korea, (inaudible) models, its revival plan kept being fruitful. Our market share in Korea was up almost 0.2 point to 4.5%. This growth came from [KM3] and its 17,000 units sold since January.
At the same time, on the top of (inaudible) production strong pace exported to Nissan America, the domestic production volumes were sustained through a robust life-cycle management of the two-pillar models such as SM5 and [KM5].
Second in China, the market was down 2.4%, but around minus 20% for CBU market, which concerns us. In this context, in the expectation of our local production launch, by the end of the year and sales by the beginning of next year, our performance with Koleos has significantly decreased. In China at this level, I would say we have no risk, but huge opportunities.
Before wrapping up this chapter on commercial performance, I'd like to share our perspectives for the end of the year on slide 15. The European market should confirm its growth in Q4 to reach a full-year minimum 8% increase, with outlook positive, including France around plus 5%.
The situation in our main emerging markets should remain adverse and volatile. But in this context, we confirm our 2015 initial commercial objectives. First, increase global registrations; second, strengthen the Renault brand in Europe; and third, improvement of our position in emerging markets.
Our main assets will remain our new products' attractiveness with Clio and Catptur, which are still not aging; and (inaudible), which is dynamic; Espace and Kadjar launch, which are already a success in terms of sales and revenue; Kwid launch in India, very promising with already 50,000 bookings; and Oroch, last but not lease pickup in Brazil, which (inaudible).
We do believe that there is more to come in terms of volume and revenue for the last quarter. Our growth has accelerated during the third quarter, and we'll carry on this trend by the end of the year. Thank you for your attention. I hand over to Dominique who will review our third quarter revenues.
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Dominique Thormann, Renault SA - CFO [5]
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Thank you, Jerome. I will start this part of the presentation with the change in third quarter revenues compared to last year, on slide 17. As you can see, group revenues increased 9.4% to EUR9.336 billion in the quarter. The contribution from the automotive division increased 10.2%, while the contribution from sales financing was down 2.2%.
I will start the analysis with the review of the automotive division on slide 18. On this slide we show the contribution to the change in automotive revenues for the third quarter broken down by item. Reading from the left-hand side of the chart, the first item, volume, increased by 0.6 points. This positive impact is smaller than the increase in registrations, due primarily to the fact that some of our CKDs are included in registrations, but are not captured in the volume effect.
Next, geographical mix accounts for a negative 0.6 points, reflecting the strong sales in Southern Europe. The product mix effect was positive in Q3 by 2.3 points, mainly thanks to the contribution of Kadjar and Espace, which have a higher selling price than the group's average.
The price effect was also positive by 2.3 points. This is the reflection primarily of price increases implemented in certain markets in order to offset currency weakness.
The sales-to-partners item was the strongest contributor to the growth in revenues during the quarter, with a positive impact of 5.2 points. This relates to strong volumes, in particular the Rogue for Nissan and powertrains for Nissan, but also for Daimler.
As we had previously guided you, please note that Rogue production, which started in September last year, will show a much smaller year-over-year comparison in the fourth quarter.
The next item is foreign exchange, which was negative with a 2.2 percentage point impact, showing a significant deterioration compared to the first half. This headwind is primarily the reflection of another fall during the third quarter of the Brazilian real and Russian ruble.
The last items, others, is positive by 2.6 points. This item represents the activities outside the new car business, mainly spare parts, non-new-car sales, as well as restatements related to buyback commitments and R&D invoiced to partners.
If you now turn to slide 19, we saw the usual destocking effect seen in the third quarter at independent dealers from 333,000 units to 243,000 units. At the same time, group inventories increased by 83,000 units. All in all, total inventories ended at 503,000, slightly below June's level, but 10,000 units above a year ago.
Due to the traditional seasonal patterns, these inventories represented 75 days of sales. However, on a forward-looking basis, our inventory level is a bit low at 58 days.
I will now move on to slide 20, and comment RCI's commercial performance. Revenues decreased 2.2% in the quarter at EUR534 million. As you know, revenue is not the best way to gauge RCI's performance. This decrease reflects record-low interest rates in Europe, and a negative foreign exchange impact mainly coming from Brazil.
In terms of activity, the number of new contracts written by RCI bank in the third quarter increased by 15.2% versus the same period in 2014. New financings in the period rose 21.9% and reached EUR3.8 billion. As the business growth was driven by Europe, the net financed amount per contract was higher than a year ago. As a consequence, average loans outstanding increased by 12.8% compared to the third quarter of 2014.
Before moving on to the Q&A session, I will turn to the last slide, number 21, which gives you our outlook for 2015. As I mentioned in my preliminary remarks, we confirm our guidance for the full-year 2015, which calls for increased registrations and group revenues at constant exchange rates, improved group operating margin and that of the automotive division, and finally positive automotive operational free cash flow.
This concludes our presentation. Together now with Jerome, we will take your questions. And I will hand the call over to the conference operator. Thank you very much for your attention.
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Questions and Answers
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Operator [1]
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(Operator Instructions) Thomas Besson, Kepler Cheuvreux
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Thomas Besson, Kepler Cheuvreux - Analyst [2]
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Thank you, very much. It's Thomas Besson, Kepler Cheuvreux. I have two please. First, can you comment on the impact of new products ramp up and on their quality, specifically focusing on the Kwid, Talisman, the Chinese operations and Megane, please?
And second question, we've seen the product mix sequentially stable at 2.3% in the quarter. Is it fair to assume it could rise further in Q4 as you have ramped up these new products? Thank you.
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Dominique Thormann, Renault SA - CFO [3]
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Okay, Thomas, you're first question is about cars that have not yet launched. So you're speaking about Talisman, Kwid and our China operations. So where we're parked-- actually, sorry. Take that back. Kwid has launched. Talisman is not yet in the showrooms. But we're just a few weeks away.
So we're in the last stages of production ramp-up for this D segment, we'll launch first in Europe. It will launch out of the factory in the North of France, in Douai. Kwid, as Jerome said, is taking huge orders. And so the plant is basically everything that they can make is being sold. These are bookings which have deposits that are being paid. So right now, the order intake is clearly stronger than our production capacity. But that's, I guess, a good problem to have in that we're working aggressively in India to meet demand.
China on the industrial side is on track. The factory is producing pre-series right now. And we're in the last stages of tuning the assembly lines. So we're pretty much set to go for commercial launch in 2016, as scheduled in the first part of 2016. So right now China is on track.
As far as the mix, maybe that's more of a sales question. Clearly the new cars, I think Jerome gave you a few numbers that show the impact of Espace and Kadjar, for example.
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Jerome Stoll, Renault SA - Chief Performance Officer [4]
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Yes, obviously with the introduction, you know, we have started the renewal of our line-up from the A and B segment. And now we are moving to the C and D segment, taking benefit of the [communization] of the same platform, the CMF-CD. So we have started with Espace. We have Kadjar. And we're going to have to renew from beginning of 2016 the Megane family with the Scenic DM.
So you can expect in 2016 and the following months on 2017, a higher mix. Obviously in Europe and in other regions, it will depend. In American we're going to have Oroch, who will also have an impact on the mix. Obviously in AMI with Kwid. Kwid is a car which is sold at around EUR4,000, EUR4,000 to EUR5,000. So it will have a second effect it will bring to revenue. But in terms of revenue per unit, it may offset a little bit the evolution.
But globally the revenue per unit will dramatically increase in the coming months.
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Thomas Besson, Kepler Cheuvreux - Analyst [5]
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Great. Thank you very much.
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Operator [6]
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Charles Winston, Redburn Partners
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Charles Winston, Redburn Partners - Analyst [7]
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Yes. Hi, Charles from Redburn. Two from me please. First on just obviously FX, as you highlighted, has turned fairly negative. Obviously it's eased a little bit as we've come into the fourth quarter in terms of the BRL and the ruble perhaps coming off peak. Overall, I mean I recognize this is a revenue call. But perhaps could you just give us some sort of feel for your thoughts about the impact of FX on profit in the year? Is the second half headwind going to overwhelm the first half tailwind? And if so, is that going to be material? Or should they pretty much match each other? Any thoughts there will be useful.
And then second question again, and I'm going a little bit off piece here, but obviously with the EU announced the 2.1 times compliance factor on NOx yesterday, could you perhaps give your thoughts as to what that might mean in terms of costs from 2017 onwards? Is that pretty much as you expected, or anything you can help there. As I said, I know this is a revenue call. But obviously it's quite an important announcement. It's the first time we've had a chance to talk to you since then. Thank you.
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Dominique Thormann, Renault SA - CFO [8]
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Hi. Good evening, Charles. Yes. So on the FX, your FX question, yes. You're right. This is a revenue call. But the swing over the summer months was quite adverse. We were-- it was a tailwind in the first half. Obviously it's turning into a headwind. As things are-- I think the best guidance we can give right now is to say that the headwind is going to be-- is going to offset the tailwind that we had in the first half. And I don't have a crystal ball.
But if it gets any worse, then we'll just have to deal with that. But it's one factor that we can cope with in part through pricing action, and once again depending on where it is, when it happens, et cetera. All of the currency movements are not adverse. Because some of them will also impact supply and sourcing-- some of our procurement actually benefits from this.
So it's not a-- it's a box that is difficult to predict in the [walk]. And it's obviously one that you can't manage to. But right now, yes, it is trending adverse to earnings. And I would expect that to certainly wipe out the first half's positive result for the full year.
As far as the NOx diesel issue, yes, so the announcement was made. And this is still very preliminary actually. It still has to go through a few hurdles in terms of final approval. But this is pretty much in line with what was expected. Of course it's going to add on cost. But this was also in our plans. And this is something that is written into our development or our R&D budgets have this integrated for future spend. So right now it's a little bit too early to give you, given on this specific regulatory hurdle, to give you a specific per-unit cost or something. We'd have to run a few more numbers on this. But it's pretty much what was expected.
So once again, it's a cost. And it's an industry issue. So we'll just have to deal with it as will everyone else. But maybe Jerome wanted to add a few words on the sales side.
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Jerome Stoll, Renault SA - Chief Performance Officer [9]
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No. It's clear that it's a global trend that we were expecting, the evolution. I mean I would say the evolution of the mix diesel gasoline, it's a trend that we were expecting. It's a longer trend. And it was incorporated in our strategy.
Whether the [diesel gate] will increase this evolution or not, frankly we have to wait for the regulation. Because when you look at the customer behavior, for the time being it has no impact. So they are waiting for the regulation to be issued. And then we're going to see what kind of impact it will have.
Keep in mind that for a customer, in terms of consumption, there is a difference of 15% to 20% difference in terms of consumption in favor of diesel versus gasoline. So unless there is strict regulation which will push the customer and the car maker to move, the customer at the initial stage will prefer diesel, especially the ones who are driving a long distance.
As far as we were concerned, since we have renewed our A and B segment, which are not the ones where the mix of diesel is higher, we have experienced, at least in Europe, a decrease in the ratio. We were at 68% in 2012, diesel versus gasoline. We are now around 60%. The trend obviously will accelerate if the regulation is tougher. But as far as we are concerned, it will be slowed down by the fact that we are now renewing our C and D segment where the gasoline-- where the diesel is generally with higher mix.
So we have a mix effect. We are waiting for the regulation. And we're going to see in more detail what is our impact.
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Charles Winston, Redburn Partners - Analyst [10]
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Great. Thank you.
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Operator [11]
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Gaetan Toulemonde, Deutsche Bank
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Gaetan Toulemonde, Deutsche Bank - Analyst [12]
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Yes, good morning. I have two questions, relative quick. They're for Jerome. The first one Euro 6, there is an additional cost in the second half. Today, you feel comfortable that you're going to be able to pass on the bulk of it to your customers, or can you give us a little bit of an update on that?
And the second question is you seem relatively optimistic on order book in Europe for the fourth quarter, the European market being relatively strong. Can you help us to square that in terms of numbers? If the European market is up 8% in the fourth quarter, can we expect that Renault will match the European market and your market share will be more or less in line with the market?
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Jerome Stoll, Renault SA - Chief Performance Officer [13]
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I will answer the second question first. Frankly what I can see on the European market is a very strong market. I mean I said plus 8% for the year. But frankly, with an outlook positive, because for the time being it's even higher. As far as we are concerned, we have been a little bit late in the delivery of some cars. And the fourth quarter, the last quarter of the year, should normally enable us to re-catch back some market share which have been lost in the first part of the year.
I'm very confident on this aspect. And we have the car. We have the product. We have the portfolio. So normally, if everything goes well, we should catch back the market share, and have a higher volume in the last quarter compared to the third quarter.
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Gaetan Toulemonde, Deutsche Bank - Analyst [14]
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Okay. If I understand well, that means that since you lost a little bit of market share in the third quarter, you should do in the fourth quarter more than the market. Is that correct?
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Jerome Stoll, Renault SA - Chief Performance Officer [15]
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That's right. That's right.
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Gaetan Toulemonde, Deutsche Bank - Analyst [16]
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Super. Thank you.
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Dominique Thormann, Renault SA - CFO [17]
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Gaetan, your first question, I'm a little bit at a loss to answer you. Because first of all it's going to depend on what competition does. Because consumers have choice, right? And since everyone is going to have to have the same technology or the same-- comply with the same regulation, depending on how it's packaged, how it's pitched, how it's marketed, we just don't know how and where consumers are going to react.
It can affect mix, as Jerome was saying in terms of the overall diesel versus gasoline mix. It can affect segment mix. It can affect-- there's a whole bunch of things that it can affect. And I think we'll just-- as everyone else, we'll have to deal with it as it arrives. So it's difficult to model.
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Gaetan Toulemonde, Deutsche Bank - Analyst [18]
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Okay. But one of your competitors mentioned that they expect to pass on approximately 70% of the incremental cost of Euro 6 to the customers. Is it a number you feel comfortable with? Or you think it's too ambitious? Or can you help us a little bit to get an idea?
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Dominique Thormann, Renault SA - CFO [19]
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I'm certainly not going to comment what our competitors' expectation is.
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Thierry Huon, Renault SA - Director of Investor Relations [20]
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Gaetan, my understanding is that this competitor said that so far they've been able to pass 70%. But my understanding was not that they're saying that they are going to be able to continue this trend.
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Gaetan Toulemonde, Deutsche Bank - Analyst [21]
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Okay. Thank you.
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Operator [22]
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Horst Schneider, HSBC
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Horst Schneider, HSBC - Analyst [23]
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Yes. Thanks for taking my question. It's Horst from HSBC. My first question relates to your revenue walk-down and the fairly big number that we have seen in the others line this quarter. So I want to get more detail what has driven here precisely then the revenue growth. Is it more a one-off factor, or is there something we can expect also in the next few quarters?
And then my second question relates to pricing. We see a fairly strong price impact this quarter. So since you continued to increase prices I guess, in Russia and Brazil, should we expect this price impact to accelerate not only in Q4, but also in the quarters in 2016?
And then my last question is basically on emerging markets, if you see any light at the end of tunnel in Brazil, in Russia, and if you maybe see the Turkish market to get much more weaker in 2016? Thank you.
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Dominique Thormann, Renault SA - CFO [24]
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Hi, Horst. It's Dominique. So I'll take-- so the others box, before Jerome answers your pricing question, the others box is a mix of items. So it's non-new-car sales. It also includes things like used cars. But it will also include R&D, so engineering that is re-invoiced to partners. We do development for some of our partner companies.
That hit the third quarter. It's not-- it all doesn't happen in the same--you know, it's not a linear thing. So I would expect that to be less in the fourth quarter. There's also the parts business, which is in this box. And that's more of a linear type of sales pace. So I would expect that number to be on a variance basis to be a bit smaller in the fourth quarter. And therefore I don't have the comparison right in front of me, compared to the first half. But it's certainly the fourth quarter will be less, should be less than this current quarter.
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Horst Schneider, HSBC - Analyst [25]
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Okay. Thank you.
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Jerome Stoll, Renault SA - Chief Performance Officer [26]
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So as far as prices are concerned, let's talk about-- I would say that globally speaking we're on track with what we have said, and that we're going to do. Obviously we have to manage the new model strategy and the old model waiting for the replacement of this model.
All in all, when I look at the two indicators that we are following, I mean what we call TPVA, transaction price-value adjusted, and first one which is the positioning of our most sold car in one segment compared to the competition. We have improved by 0.2 points worldwide against the basket, and in Europe by 0.3 points. So we are really on track, and able to more than offset the aging of our lineup by the renewal of our car new models with some indication I gave you during my statement.
The second indicator we are following is the weighted average price, which is looking at country by country, the price average of all models compared to the basket. And here again we are moving up. It's obviously due to the fact that we are renewing our lineup with upper segment cars, which obviously have a huge impact on the revenue per unit, and have an impact on the average price, weighted average price, as I explained with Espace and Kadjar, for instance, in Europe.
Looking at outside Europe in Russia and Brazil, the two countries that you were talking about, when I look at Brazil, we have tried to offset the ForEx situation. We have been above the competition. We have increased by more than 7% our prices versus plus 5% in our competition.
So it's not yet enough to cover the full ForEx. Nevertheless, when you look at the region with Argentina, we are well-managing the ForEx of the region.
As far as Russia is concerned, here again we have been ahead of the competition in terms of price increase to offset the ForEx situation, devaluation. Since the crisis started in Russia, we have increased our prices by more than 25% versus the competition, which was at plus 17%. So here again, our price positioning is getting, I would say, a little bit better.
Whether we are at the end of the tunnel, frankly Brazil I don't think so. They have plenty of local issues to fix and to address, which I don't see yet any positive answers. Russia, the market seems to be stabilized in this downturn. I may expect some positive news in the coming weeks and months. As you know, we are at 50% of the market that renewed before. So it's a big drop, and we are just starting to recover. I don't know whether it will be sustainable in terms of recovery. But there is a kind of stabilization with some small rebound, we don't know how it will come.
Turkish, it was where everybody's waiting for the election. I think it's this week. And we're going to see what is the outcome, and what kind of assumption we may take for 2016.
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Horst Schneider, HSBC - Analyst [27]
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All right. Thank you, very clear. Thank you.
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Operator [28]
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Philippe Barrier, Societe Generale
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Philippe Barrier, Societe Generale - Analyst [29]
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Yes, good evening. Phil Barrier. Quick question if I may, just question regarding just the pricing again on the (inaudible) that's in Europe. Because of the strong increase is forecast of market. You open the market up 8%. Do you think that the pricing environment is going better now, and that global incentive, overall incentive may go down also for aging cars?
Second question is regarding the volume impact on 9 months. The volume impact is positive by 2.5 points, largely above the 1% retail sale increase you have registered. What should be the trend in Q4, given the deliveries you expect from new models? Actually do you expect some increase in the volume impact in Q4 compared to the 9 months?
And the last point, a specific point on Germany, because we could see in the retail sales you sent, [awful] figures in September for Renault in Germany. What is the explanation? What do you expect in Q4?
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Jerome Stoll, Renault SA - Chief Performance Officer [30]
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On pricing, frankly the booming on European market has a slight impact on the prices and the rebate. We see that the rebate's slowing down a little bit. But would it be sustainable? I don't know. So it's a little bit early. For the time being we are trying ourselves to follow what we have drafted as a strategy in terms of pricing, which is catching back the position against the basket. And this is exactly what we are doing.
So as far as Germany is concerned, the main issue is related to supply. I mean delivery. We had, as you know, and it's valid also for France. We had to offset the strikes that we suffered in Turkey, a long strike, which has affected dramatically the production of Clio. And it's had an impact on the France market share and maybe also Germany. Actually it's more a question of lead time and delivery than anything else.
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Dominique Thormann, Renault SA - CFO [31]
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And Philippe on your question on volume, I expect that the Q4 contribution of volumes in the [walk] to be higher than in Q3 certainly.
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Philippe Barrier, Societe Generale - Analyst [32]
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Okay. And I'm sorry. [Just a] question on the sell-to partners in CKD; has it included sales to partners? Actually you expect some slowdown in growth of sell-to partner, but could see a CKD actually offset some slowdown coming from deliveries for Rogue to Nissan.
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Dominique Thormann, Renault SA - CFO [33]
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No. That's a bit of a-- no. The Rogue, the sales of-- to partners started in September of last year. So as you go forward, the year-over-year variance quarter by quarter is going to diminish. Which doesn't mean that sales are going down. It just means that they're staying at a higher level. This is the last quarter where you're going to have this very steep, 5% plus type of year-over-year variances. You're not going to see that in Q4.
And your CKDs are not going to make up the difference, no. You're in a different-- you're in a completely different league here.
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Philippe Barrier, Societe Generale - Analyst [34]
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Okay. Thank you very much.
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Operator [35]
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Fraser Hill, Bank of America
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Fraser Hill, BofA Merrill Lynch - Analyst [36]
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Hi. Good afternoon. It's Fraser from Bank of America. Just on the-- first question is on the pricing relative to the currency. You've been pretty clear that some of the pricing gains here are reflecting measures to deal with FX in emerging markets. Could you just try and just give us an idea, Dominique, how much of that sort of 2.3% price that we've seen in the quarter here reflects sort of those measures, and how much is more genuine underlying price improvements that you've managed to achieve?
Second question on the content enrichment. It sort of goes back to Gaetan's question really. But I'll probably ask it a different way. I mean I know you're not certainly going to talk about how much content enrichment you're able to offset. Maybe I could sort of look at it this way. You were pretty clear that was a reasonably substantial headwind when you spoke to us at Q2. And that was the guidance for the rest of the year, which was fully absorbed and understood.
And as we stand here today, coming into November, are you seeing incrementally a greater number of positive factors helping you to offset, i.e. the price, i.e. the product mix that we've seen in the second half of this year. Has that developed incrementally positively relative to what you might have thought in the Q2-- right about the Q2 report time? Thank you.
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Dominique Thormann, Renault SA - CFO [37]
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Thanks. Hi, Fraser. Listen, on price, the vast majority of what you're seeing in this variance in this walk today is offset currency impacts that we saw that happened at different stages during the year. So the currency impact is immediate. And then pricing, you know, you decide pricing today. But then you have to sell the cars, right? So the price effect is always in front of you, whereas the currency impact is kind of behind you.
So there's always that timing difference. But what you're seeing here, the vast majority of this price walk, is mostly coming to offset weaker currencies.
Now your question on the mix price bucket. That effect in the first half was probably more negative. I think that the guidance we can give you in this, for the second half, is that it's going to be less of a headwind. It's still expected to be a negative. But I think that doubling H1 is probably too conservative at this stage.
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Fraser Hill, BofA Merrill Lynch - Analyst [38]
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Okay, perfect. Still a negative but substantially reduced on that H1 headwind?
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Dominique Thormann, Renault SA - CFO [39]
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Yes.
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Fraser Hill, BofA Merrill Lynch - Analyst [40]
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Great. Thank you.
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Operator [41]
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So we have no other questions, gentlemen.
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Thierry Huon, Renault SA - Director of Investor Relations [42]
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So thank you very much for being on the call this evening, and my team and myself are still available if you have further questions. So do not hesitate to call us. Have a really good evening. Bye.
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Operator [43]
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Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.
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