Q1 2016 Renault SA Corporate Sales Call

RNO.PA - Renault SA
Q1 2016 Renault SA Corporate Sales Call
Apr 21, 2016 / 04:00PM GMT 

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Corporate Participants
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   *  Dominique Thormann
      Renault SA - EVP, CFO, Chairman of RCI Banque
   *  Thierry Koskas
      Renault SA - EVP Sales & Marketing
   *  Clotilde Delbos
      Renault SA - Incoming EVP and CFO

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Conference Call Participants
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   *  Thomas Besson
      Kepler Cheuvreux - Analyst
   *  Charles Winston
      Redburn Partners - Analyst
   *  Horst Schneider
      HSBC Global Research - Analyst
   *  Fraser Hill
      BofA Merrill Lynch - Analyst
   *  Jose Asumendi
      JPMorgan - Analyst
   *  Victoria Greer
      Morgan Stanley - Analyst
   *  Gaetan Toulemonde
      Deutsche Bank - Analyst

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Presentation
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Operator   [1]
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 Ladies and gentlemen, welcome to the 2016 first-quarter commercial results and Renault Group revenues conference call. I now hand over to carry Thierry (inaudible). Sir, please go ahead.

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Unidentified Company Representative   [2]
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 Thank you. Welcome to Renault first-quarter 2016 conference call, broadcast live and in (inaudible) on our website. Presentation slide and press release for this call 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 the this document and, in particular, about forward-looking statements. And I would like all participants to read this.

 Today's call is scheduled to last about 45 minutes. We have two speakers this evening: Thierry Koskas, Executive Vice President and head of sales and marketing; and Dominique Thormann, EVP and CFO. The presentation will last about 20 minutes and will be followed by a Q&A session. If we do not have the time to take everyone's questions in the session, the IR team 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 - EVP, CFO, Chairman of RCI Banque   [3]
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 Thank you, Thierry, and good evening, everybody. Before reviewing Q1 commercial results with Thierry Koskas in a minute, I would like to highlight the key takeaways from the first quarter. Firstly, the European market was better than anticipated during the quarter under review. In light of this, our full-year assumption made at the beginning of the year appears to be too cautious.

 As you have probably seen in our release, we have upgraded our full-year market forecast for the region to at least plus-5% versus plus-2% previously.

 Secondly, our European business has been the major driver of growth in Q1. This results from the success of our new models in addition to the growing market.

 Thirdly, we are still facing very contrasted situations outside of Europe, with high growth in some markets such as Iran and India, but significant declines in others like Brazil, Russia and Algeria.

 Lastly, as I highlighted during the full-year presentation last February, foreign exchanges turned to be strongly adverse in Q1. Given this overall context, we confirm our full-year guidance for 2016.

 Having made these preliminary remarks, I will now pass over the call to Thierry Koskas, who will review our commercial performance in the quarter.

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 Thierry Koskas,  Renault SA - EVP Sales & Marketing   [4]
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 Thank you, Dominique, and good afternoon, everyone. I will just comment the TIV evolution. As Dominique said, we had a strong TIV in Europe. Overall, plus-8%. I tell -- outside Europe, we have a mix situation. We have China, Korea and India, we have good orientation.

 However, we see that the market was down in Russia. In Brazil and in Algeria, overall the growth of the TIV in the world in the first quarter was 1.5%.

 I will now go to the evolution of the Renault -- the Groupe Renault sales in the world. In TIV, that grew by 1.5%. Our sales grew by 7.3%. Very quickly, before reviewing the details of the region, we grew over the market in Europe by 8.9%. Sales were stable in Eurasia in spite of the drop of the market. We had a sharp growth in Africa, Middle East and India, 36%. In America, the sales grew, followed the market. And in Asia-Pacific, we are in the transition quarter.

 Before the launch of new products, due obviously to the increase of the European market, the share of Europe in our sales is now at 63%, one point above the first quarter of last year. within the 10 first markets of Renault in terms of sales in the world, six of them are in Europe, four of them are outside Europe and our market share is progressing in eight of them. Let's see very quickly now the detail per region.

 In Europe, as we said, we progress more than the market, establishing a market share of 9.8% for the first quarter. Our customer Autobank is -- has increased from the beginning of the year by 12% and has reached an historical level that we had in 2011.

 In the next slide, we can see the results in Eurasia region, where our market share progress as well by 1.3 points, thanks to the good results we had in Russia and in Turkey as well.

 In the next page, you can see our performance in Africa, Middle East and India, where our market share is also progressing by 1.5 points. Many thanks to two countries, India and Iran.

 In India, we have taken so far 124,000 orders of Kwid. In Algeria, it was say the market dropped sharply due to the importation restrictions. However, Renault is enjoying this local production in the Iran plant.

 In America, market share in the region is stable. However, we progressed in our three main markets: Brazil, Argentina and Colombia. In Brazil, we gained 0.1 points. (inaudible) that was launched at the end of last year is in line with expectation, reaching the second position in the small double-cab pickup segment.

 And, finally, to end up this review of the regions, in Asia-Pacific region, our market share is stable. We are in a transition quarter as we start to see from the month of February the effect of two major launches that we have in the region. First of all, the Kadjar in China OUC. The sales have started at the beginning -- at the end, sorry, of the month of March. And the second one is the Renault Samsung SM-6, where we have already taken in two months over 20,000 customer orders.

 And, finally, to end this presentation, just to highlight on our new models that we have launched from mid last year, overall, all the new models that we have launched are in line or above our plan.

 And one point to highlight is in terms of residual value. The performance of these models is better or much better than models that were replaced overall. The residual value of Renault models in Europe increased from January to end of March by 3.2 points versus 0.7 for the market.

 And that ends it the commercial presentation. And I now hand over to Dominique Thormann.

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 Dominique Thormann,  Renault SA - EVP, CFO, Chairman of RCI Banque   [5]
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 Thank you, Terry. I will start this part of the presentation with the variance analysis in first quarter revenues compared to last year on slide 16.

 As you can see, group revenues were up significantly by 11.7% in the quarter from EUR9.388 billion a year ago to EUR10.489 billion this year. The automotive division was the driver behind this strong performance, with an increase of 12.6% in revenues. RCI revenues decreased 2.1% due to the falling interest rates and despite an increase of 11.3% in the quarterly production of loans. But, as you know, revenue is not an indicator of choice to gauge RCI's performance, which I will detail later in my presentation.

 I will start the analysis with a review of the automotive division on the next slide, number 17. On this slide, we show the contribution to the change in automotive revenues for the first quarter broken down by item. Reading from the left-hand side of the slide, the first item is volume. Thierry just showed you that global registrations increased by 7.3% in the quarter. Due to a lower reduction in inventory at independent dealers, then last year during the same period, wholesale invoices increased more than registrations. This led to a 10.2% positive volume increase.

 Next, the geographic mix is slightly positive, driven by higher European sales. The product mix effect was also positive by 1.9% and confirmed the trend seen at the end of last year, thanks to our recently launched models in the C and D segments. On the contrary, Kwid sales impacted the product mix negatively.

 The price effect was positive by 2.7 points. This impact is still primarily the reflection of price increases decided to offset currency weakness in non-European countries. Sales to partners contributed positively by 2.7 points and reflect the good momentum of European business, the increase in CKD volumes, as well as the continuing success of the Nissan Rogue, manufactured in South Korea.

 The next item is foreign exchange, which impacted negatively by 4.5 points. This strong headwind came from the weakness primarily of the Argentinian and Colombian peso, the Brazilian real and Russian ruble.

 The last item, others, represents the activities outside the new-car business, mainly spare parts, non-new-car sales, as well as restatements related to buyback commitments. It shows a negative contribution of 1.3 points, mainly related to buyback commitments.

 If you turn to slide 18, you will see the usual seasonal Q1 effect with an increase of inventories that reached 575,000 units versus 465,000 at the end of last year. Year-on-year inventories are up 60,000 units to keep up with market demand.

 In terms of the number of days on hand, we stood at 76 days versus 74 days a year ago, and we are comfortable with this level and appropriately stocked for Q2.

 I will now move on to slide 19 and comment RCI's commercial performance. The number of new contracts written by RCI Banque in the first quarter of 2016 increased by 10.2% versus the same period in 2015 thanks to strong sales momentum in Europe. New financings increased slightly faster than the number of new contracts at plus-11.3% to EUR4.1 billion.

 Before moving on to the Q&A session, I will turn to the last slide, number 20, which shows you our outlook for 2016. As I mentioned in my preliminary remarks, the market in Europe is improving, but, conversely, some of our main markets outside of Europe continue to decline severely. Given this overall context, we confirm our guidance for the full year 2016.

 This concludes our presentation. And now, together with Thierry, we are ready to take your questions. I will hand the call back to the conference operator. And thank you for your attention.

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Questions and Answers
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Operator   [1]
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 (Operator Instructions) Thomas Besson, Keppler Chevreaux.

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 Thomas Besson,  Kepler Cheuvreux - Analyst   [2]
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 (inaudible). I have two questions, please. Firstly, on the inventories, the increase quite meaningfully that you talked about having (inaudible) appropriate level (inaudible). So she we expect even stronger growth in your registrations in your second quarter? Or did you have a really (inaudible) stocks last year?

 And, secondly, can you update us on the Chinese side of your story and what we should expect (inaudible) ramp-up during the year (inaudible) and what is your expectation for the full year in terms of (inaudible)?

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 Dominique Thormann,  Renault SA - EVP, CFO, Chairman of RCI Banque   [3]
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 Okay. Hi, Thomas. It is Dominique. On your first question, I will let Thierry handle the China sales question.

 But on your first question on stock, yes, if you'll remember at the end of last year, we were parked very low. We were somewhere in the 50 -- we were below 60 days, somewhere around 56. And I told you that -- actually, I'm sorry, 53 days -- apologize. And I told you that that was a bit -- that was really too low.

 Given the pace of the first-quarter sales in Europe, we have been running our production at higher levels. And it is also related to the fact that we are in the middle of the launch of some very high-volume cars in high-volume segments. And, particularly, Megane is in its launch phase.

 All of the other vehicles that Thierry Koskas mentioned in his presentation are also running at or above plan, which means that, on a run rate, if I look forward into the quarter -- into the second quarter, we are somewhere around 60 days, which is very much in balance where we try to manage overall stock levels, too.

 We are also ramping up Kwid. In India, this is also a very high volume -- there is a very high-volume impact. Thierry told you we have taken in over 100,000 -- actually, over 120,000 orders. And so this is mainly an issue of how fast we can deliver those units.

 So if you look at it, Q2 is -- the order bank is very high, as Thierry showed you. So, yes, we are going into the second quarter with a high order book, high-volume segment renewals, particularly Megane in Europe and quid in India. And we are expecting, as we have confirmed our guidance, that we are on the path to meeting our objectives.

 Now, specifically on China and the sales space in China, why don't I hand over to Thierry?

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 Thierry Koskas,  Renault SA - EVP Sales & Marketing   [4]
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 Yes. Thank you, Dominique. So just to precise that we are -- we launched the Kadjar at the end of last month. It has generated a lot of interest. We are starting the sales process. So far, we have taken above 2,000 orders. And we also are in the process of having our network grow as well in China thanks to the launch of this new automobile. So it is obviously very early days, but the start is in line with what we expected.

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Operator   [5]
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 Charles Winston, Redburn Partners.

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 Charles Winston,  Redburn Partners - Analyst   [6]
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 Just two issues for me. First and just in terms of FX, obviously during the quarter we saw a quite a lot of volatility. And, since then, the ruble and the Brazilian real have strengthened quite a lot. Would it be fair to say that the impact of FX in the full year is likely to be less than the 4.5% that we saw in the first quarter? And, attached to that, would it still be right to use a roughly 35% drop-through in terms of the impact of FX from revenue to profit, which I think is a figure you have given in the past?

 The second question is just in terms of sales to partners. Can you remind me the timing of the next new contract? I think there is certainly Nissan Micra; there is a contract there on sales to partners. I think also you have a contract to make LCV (inaudible) at some point coming up. Can you remind me of the saving and the cadence there? Thank you.

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 Dominique Thormann,  Renault SA - EVP, CFO, Chairman of RCI Banque   [7]
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 Thanks for your two questions. Foreign exchange is my quarterly crystal ball question. It is -- let me try to -- and, plus, this is a revenue call. This is not an earning -- I mean, this is not a profit call. So let me try to give you a little bit of guidance.

 If you look at revenues -- and, sequentially, you are right. Some of the currencies as the year goes on, if they were at today's rates, would not be materially different than they were last year. For example, the ruble. And you will probably see, sequentially, some improvement in the Brazilian real. However, there are some currencies which started to move very adversely to us in the month of March, which I didn't call out in the ones that I listed because it was only really one month. But it is where you are living, and that is sterling.

 So, depending on what happens with sterling, which is probably our biggest flow currency in terms of -- we don't have an offsetting cost base in the UK as much as we do in other countries that have, for example, manufacturing. In Argentina, we have a domestic manufacturing base; in Russia; even in Algeria.

 So it is a very contrasted situation. If I were to give you guidance strictly on top line, I would basically take this quarter and just multiply it by four. And that does not mean that the drop-through now is going to be exactly in line with what we had in the past. If the pound really moves adversely, that is the one where the sensitivity to a 1% change in the value of sterling is the highest, approximately EUR17 million in our books. If you take the other currencies, then they are much, much less because we have an offsetting cost base.

 So the top line, just for guidance and just for modeling purposes -- take this quarter and just straight-line four quarters at the same pace. That is with, once again -- this is not a prediction of where currencies are going. It is just answering your question as to, if I take today's rates, and what we have seen in the last few weeks, what does this mean going forward.

 Now, sales to partners, you are right. If you'll remember, I told you at the close of last year that, in the first three quarters, you're going to see a little bit of a plateau and a leveling off on a variance basis compared to previous year. Sales remain good of the Nissan products as well as products supplied to Daimler, but also vans for GM, Opal and the Vauxhall brands.

 But on a variance basis, you're right. There is going to be a Fiat product coming in, which is a light commercial vehicle. And later in the year, the Nissan Micro, which is a passenger car. So the Fiat product is a small volume. I mean, this is a van. So this one comes in, and the impact will be felt mostly in Q3. And then, you'll have to wait until Q4 to get the Nissan Micro. And the Nissan micro is a much higher-volume car; we are talking here somewhere about 10,000 to 11,000 units a month. So this is Q4.

 All other things being equal, partner sales on a variance basis will pick up, clearly, in 2017, compared to 2016. So I hope I was clear on that.

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Operator   [8]
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 Horst Schneider, HSBC.

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 Horst Schneider,  HSBC Global Research - Analyst   [9]
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 It is mainly on FX again and on pricing. If you see this FX impact, what is the inner logic assumption for pricing? So in other words, I want to say, to which extent that are you able, to pass on these FX movements now to customers? And maybe you can provide more detailed update by region.

 And in that context, also, within that price component, what is the impact from Europe? In other words, what are you seeing in terms of pricing in Europe and then more on the European (inaudible) outlook again? You will say Europe up at least 5%. I mean, some other carmakers have said already Q2 should be as strong as Q1. Would you confirm that? Thank you.

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 Dominique Thormann,  Renault SA - EVP, CFO, Chairman of RCI Banque   [10]
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 Let me share with my colleague, Thierry, here on pricing and on the European sales pace. On foreign exchange, you're right. Some of the -- most of the impact in Q1 results from decisions taken in the past to offset currencies, particularly in South America, but also in Russia. Now, sequentially, when currencies devalue, the impact is immediate. But when you decide to price to offset that, clearly, the impact is diluted, and it takes time for that to flow through until the units actually get sold.

 So typically, you will look at -- depending on how localized we are and how much local content there is, we will try to offset. And in countries such as Russia and Argentina, the offset has been actually quite good -- approximately 70%. In Brazil, it has been more difficult. And the guidance I could give you there is more around 30%.

 So in general, you are able to do some offsets in pricing. But clearly, you run into issues of elasticity in domestic market depending on how well the country is localized or not.

 Now I will hand over to Thierry on pricing in Europe. And if you want to say something about Argentina, Thierry used to run Argentina for us, so he will know more about it than I did.

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 Thierry Koskas,  Renault SA - EVP Sales & Marketing   [11]
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 Absolutely. We had some -- we are rather used to taking into account, if I may say, the devaluation into our pricing policy. But in Europe, just to precise that OUCU is the launch of new models. We take this (inaudible) to improve our price positioning. We already did it last year compared to the basket of (inaudible). We also have, for this year, 2016, a roadmap to improve gradually our price positioning in all European countries. I don't have any details figured at the end of the first quarter because it requires a detailed analysis of the company (inaudible. But we are in line in our pricing policy with this roadmap, which will enable us to improve or gain gradually our price positioning in Europe, thanks to the new models.

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 Horst Schneider,  HSBC Global Research - Analyst   [12]
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 And in UK, you are able to pass on the negative FX as well or just to a limited extent?

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 Dominique Thormann,  Renault SA - EVP, CFO, Chairman of RCI Banque   [13]
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 Horst, the negative FX impact in the UK is very, very sudden and very recent. So this is something that would be under review, but not in Q1. No.

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 Horst Schneider,  HSBC Global Research - Analyst   [14]
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 Okay. All right. And volumes in Europe, Q2?

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 Dominique Thormann,  Renault SA - EVP, CFO, Chairman of RCI Banque   [15]
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 Production volumes or sales volumes?

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 Horst Schneider,  HSBC Global Research - Analyst   [16]
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 No, I asked if Q2 can be as strong as Q1, as some other carmakers said already.

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 Dominique Thormann,  Renault SA - EVP, CFO, Chairman of RCI Banque   [17]
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 Oh, you mean total industry.

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 Horst Schneider,  HSBC Global Research - Analyst   [18]
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 Yes, total industry. Correct.

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 Thierry Koskas,  Renault SA - EVP Sales & Marketing   [19]
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 What we are saying is total industry, we are viewing at least 5% throughout the year. For the first quarter, it was plus 8%. But with two very strong months, January and February, that we are above 10%. And then it is -- the growth slightly slowed down in the month of March, where the sales -- the volumes were up by almost 6%. So we are now looking at the growth rate, which would be around 5% every quarter.

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Operator   [20]
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 Fraser Hill, Bank of America Merrill Lynch.

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 Fraser Hill,  BofA Merrill Lynch - Analyst   [21]
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 Three questions for me. First one, Dominique, can you just talk a little bit about the wholesale versus retail dynamic for the rest of the year, or at least maybe into the second quarter where you have got some visibility? You are saying you are comfortable with inventories, but you have got that order book that looks very high.

 So are you still going to need to, I guess, sort of overproduce when you have a better wholesale number versus the registrations we are going to see, at least in the second quarter? If you could comment there.

 Second question, on FX, just sort of asking it the other way around to Horst, really. If you look at the price that you delivered in the quarter, which was 2.7%, how much of that was underlying or genuine price delivery? Or how much of it was just offsetting FX?

 And then, finally, on your orders, you have obviously got a sort of fairly high level of inventory in historical standards. I know it is (inaudible) sale that looks comfortable relative to Q1 norms. But if your order book at an all-time high globally, in the same way that it is in Europe --. I think really just looking at that order book on slide 9, I just wondered if you could put a comment, at least, on your global order book. Is that in the same situation on a total global picture as well?

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 Dominique Thormann,  Renault SA - EVP, CFO, Chairman of RCI Banque   [22]
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 Okay. On wholesale, I would expect -- I mean, Q2 is -- there is some seasonal patterns. You are in the spring selling season, at least in the Northern Hemisphere. So I would expect production volumes to be higher than Q1 despite, once again, the level of stock that we have going into the quarter. This is kind of normal for us as we -- as I have said in the past.

 And I don't really see an imbalance between the level of wholesale and retail that we expect in the quarter. Now, some of it is distorted by -- if you are looking strictly at Europe, you are much closer production to deliveries to registrations, have a much shorter car flow than if you are producing for more distant markets. And, depending, once again, on the level of localization, you can be in a very long supply chain, for example, in Algeria or in some of the South American countries.

 So depending on where it is, I think, globally, if we look around the world, our levels of stock versus order intake, car flow and what we are seeing in terms of our own launching sequence. So right now, as I said, we are in a launch phase of Megane. I mean, some countries don't even have it yet. And it is just the units are literally being delivered; the UK, as an example. So you're going to have very high production of right-hand-drive vehicles, which haven't yet been delivered.

 So I don't really see anything particularly out of balance. If I look on a forward-looking basis from where we are parked at the end of March into Q2, I am seeing around 60 days. So it is nothing very different than the numbers that we typically manage to.

 Now, on price, the effect that I showed you, the majority of the price effect, as I said in my remarks, are related to offsetting decisions that were made in countries that either have high inflation --. Don't forget that countries like Argentina or Brazil or Russia, when you are talking 10%, 12%, 20% inflation -- underlying inflation. And on top of that, you have currency devaluations. We have done a number -- we have taken a number of actions to offset that.

 Now, as I said before, when currencies devalue, the impact is immediate. However, when you price, the impact is diluted over time because you have to sell the units. So if you are in -- if you have them in stock, they are going to end up in your -- they won't show in your top line until you have actually restocked with fresh product coming in at a higher price point. So it's -- I think the pricing discussion, at least in Q1, is mainly related to that effect.

 Your third question is on (multiple speakers).

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 Thierry Koskas,  Renault SA - EVP Sales & Marketing   [23]
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 Yes. Thank you, Dominique. We don't have outside of Europe a direct reading of the customer Autobank because it doesn't go through the same system. However, what we can surely say is that there are two phenomenon that we have this year and that we did not have last year. The first one is quid. Quid, as I said, we have taken 120,000 orders. We have so far delivered 40,000 cars to customers. So we have an order book of 80,000 units.

 And, in [Coryell], the launch of SM-6 represents also 20,000 cars, of which very few have been handed over so far. So we probably would have outside of Europe a global order book which would be in the region of 100,000 more than last year.

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Operator   [24]
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 Jose Asumendi, JPMorgan.

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 Jose Asumendi,  JPMorgan - Analyst   [25]
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 Just a couple of items, please. The first one, just to confirm that -- I mean, I hear from most of carmakers in the UK, they are not able to increase prices. There are certain (inaudible), basically. This was to confirm that you are also in the same comp and you are not increasing prices so far.

 The second element, for Thierry, can you talk a little bit about (inaudible)? How successful are you passing on price increases or (inaudible) pricing up the incremental content you are putting on the new product launches?

 Second, if you could you also comment on (inaudible) and the initial campaigns we are hearing from dealers. Maybe it is not such a big deal for the overall Renault Groupe, but just a bit of more background why do you need to give additional campaigns for (inaudible).

 And the third item, just to take a chance to ask a question, I always wonder why you run higher self-registrations in Germany versus peers. (inaudible) Peugeot. But I think it is an opportunity for you going forward over the next month. Maybe there is a structural reason for it. So I would love to hear also your thoughts on that. Thank you.

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 Dominique Thormann,  Renault SA - EVP, CFO, Chairman of RCI Banque   [26]
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 Can I just start -- can you repeat your question on (inaudible)? I am not sure that I understood what it is you are asking for.

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 Jose Asumendi,  JPMorgan - Analyst   [27]
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 Just simply asking that, when we talk to dealers, it looks to us -- it seems to us that you used to give very low level of incentives to some of those vehicles. About two years ago, 16 months ago, when we (inaudible) talk to dealers, we are starting to see them saying that they are actually getting additional campaigns to serve the vehicles. Is there a structural reason for that, or they are simply not seeing that in the market? I just wanted to get your view of that, please.

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 Dominique Thormann,  Renault SA - EVP, CFO, Chairman of RCI Banque   [28]
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 Okay. Thierry will take that question. Most of your questions are on his side of the business, so why don't I hand over to him?

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 Thierry Koskas,  Renault SA - EVP Sales & Marketing   [29]
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 Yes. Thank you very much. So on your question regarding passing the content on the new vehicles, I think the best illustration probably is when we change from one model to another. Megane is a good example. The price of the new Megane compared to the previous one, whether you see a lot of additional content and so on. These, depending the country, between 10 to 13 points above the previous Megane. It has been well-received by the market, as the residual values are usually increasing in the same order of magnitude.

 So just an example, which it is strange that we try to pass as much as we can the content to the market.

 The question regarding Dacia for -- since we launched Dacia in Europe, we haven't changed whatsoever the business model that we have, which consists, as you well know, in very (inaudible) cost of distribution and marketing expertise. So there is no change at all on that.

 You might see -- you might have seen, for example, in France some advertising campaigns and so on, but this happens from time to time under the promotional policy on Dacia is not zero. But I still confirm that we haven't made any change in the Dacia business model whatsoever in any country in Europe.

 Regarding self-originations in Germany, I don't have any details for you. So we have to come back to you.

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 Dominique Thormann,  Renault SA - EVP, CFO, Chairman of RCI Banque   [30]
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 Jose, maybe just one follow-up from me. Just to remind you that, as part of our plan, we had told you that we were -- and this was by design and part of our growth plan -- that we were going to reinvest part of our cost savings into the attractiveness of our vehicles.

 So the content increase in our vehicles is deliberate. We did this to reposition a number of cars in segments where we were not competitive from a content point of view. So as you are seeing that our vehicle content -- feature content -- this is nonregulatory -- feature content is increasing. That is normal, and it is what we wanted.

 And as Thierry said, we are getting rewarded for that. At least the first indications I am seeing in residual value is going up. And somehow, that suggests to me that we are pricing for value.

 So that was just a little bit of a complementary -- I mean, a further follow-up comment on Thierry's response.

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 Jose Asumendi,  JPMorgan - Analyst   [31]
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 Very useful. And you're not increasing prices in the UK, as we stand right now, in line with your carmakers.

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 Dominique Thormann,  Renault SA - EVP, CFO, Chairman of RCI Banque   [32]
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 No, I said before, if the question is, are you increasing prices in the UK to offset the currency, the answer is no. That happened just -- once again, we are just seeing that now. But, no, there is no particular pricing action right now.

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Operator   [33]
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 Victoria Greer, Morgan Stanley.

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 Victoria Greer,  Morgan Stanley - Analyst   [34]
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 Just one question on the Megane, please. And you mentioned that it is not delivered in all markets yet. Could you talk a bit about your run rate? Because I guess for the new launch, starting 1,000 units in the quarter feels a bit light. Can you talk about the phasing of the launch there?

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 Dominique Thormann,  Renault SA - EVP, CFO, Chairman of RCI Banque   [35]
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 Yes. It is very, very early days. As I said -- I mean, on the production side, it is ramping up as per plan. So there is nothing that is mostly the supply chain side that is busy making them. And the rest of the deliveries, Thierry will tell you, but it is mostly going to be spread out over the coming quarter, where you will get all the different body types that are not even out there yet.

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 Thierry Koskas,  Renault SA - EVP Sales & Marketing   [36]
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 Yes. Absolutely. We have started at the beginning of the year in France. But really we just started to sell in key countries like Germany and Spain. So it is very, very early days. And we have not started in the UK, which is also a key market for this vehicle. And that should start at the end of the first semester.

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Unidentified Company Representative   [37]
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 I guess we have time for one last question.

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Operator   [38]
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 Gaetan Toulemonde, Deutsche Bank.

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 Gaetan Toulemonde,  Deutsche Bank - Analyst   [39]
------------------------------
 Dominique, unfortunately, or fortunately, I have no question at this time. I just wanted to thank you for the relationship we have built together over the last 25 years. I will not forget when you started to backslide during the slide show of Mr. Schweitzer approximately 25 years ago, and you became CFO of the Company. So I think a lot of IRs in this industry are probably dreaming about doing what you have done during that period. So definitely, thank you very much. Thank you very much for the relationship you have built with us. And we wish you very good luck for the future. And I'm sure we are all going to stay in contact with you. So thank you very much.

------------------------------
 Dominique Thormann,  Renault SA - EVP, CFO, Chairman of RCI Banque   [40]
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 Gaetan, thank you. I am very moved by what you have -- by your kind words. Thank you. Thank you to you. It is true. I have gone through a few adventures with this Company. Thank you to all of you for the patience in listening to me every quarter.

 But I would like you to take away, at least from my experience as CFO, that these types of sessions and the more closer one-on-ones, group sessions and all of the visits that we have had over the years, are particularly not only useful, but they are very enlightening to the way that management makes decisions and how we ultimately drive to steer the Company to deliver more value to our shareholders, which ultimately is what IR is about. But it is also, I think, what a CFO's mission is about.

 So I am particularly attached to the input that you have all provided over the years. Your very insightful knowledge and particularly precise questions that really make us walk away from these meetings thinking how we can improve our explanations, but also, more fundamentally, how we can improve our overall competitiveness in the market. So, thank you very much.

 Yes, this is my last call. I will be leaving and handing over my executive duties to Clotilde Delbos on Monday. And she is with me -- with us tonight, so I would like to introduce her and ask you to be as kind to her as you have been to me. And wish her all the best in this part of her new job. Thank you very much to all of you.

------------------------------
 Clotilde Delbos,  Renault SA - Incoming EVP and CFO   [41]
------------------------------
 Thank you, Dominique. Good evening, everyone. As mentioned, Clotilde Delbos speaking. I will indeed replace Dominique as CFO of Renault this coming Monday. And as just mentioned a few minutes ago, I think IR has always been an important part of Dominique's agenda as CFO of Renault. And this will not change. I am committed to work with you, as Dominique did. Just give me a few weeks to settle down before I can meet you. And, anyway, I will talk to you on our next call for the first-half results on July 28. And, in the meantime, I am delighted to meet some of you if time permits.

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Unidentified Company Representative   [42]
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 Okay. Thank you, Dominique. Thank you, Clotilde. This closes this call. And, of course, the IR team remains available if you have additional questions. Have a good evening. Bye.

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Operator   [43]
------------------------------
 Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.




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