Those are my questions. Thank you.Mikael Bratt Thank you, Hampus. I would say that the volatility has improved, but it’s not normalized yet. So there is still some way to go. It varies quite a lot between the different customers here, which will also have been the packed in the last couple of quarters here. That is not one size fits all here in terms of volatility. And it’s very much connected to [indiscernible] supply, and also what type of meaning supplier in their turn and also what kind of versions of semiconductors they are using. And as we are seeing here you later have more new technology, you have in your semiconductors, you have some vector position compared to if you have, let’s call it the older and more traditional OEM conductors.
And there is a lot of activities going on with the ones that are still on the old technology platforms you put down, semiconductors to redesign and resource there.So, our expectation is that it should move in the right direction. And that’s also in that space where the semiconductor manufacturers are putting in new capacity.So more work to be done there. But we are moving in the right direction relative to expectations is that we should see less of volatility as well, as we move forward. But as we know, there is a lot of other moving ports going on at the same time that can have some disturbances. And we are seeing that also connected to logistic issues. For example, where we’ll predict say on shipping – certain shipping lines and freight schedules are not as reliable as it was before the pandemic here.
So there are also other things going on, on top of the semiconductor issue. So again, that’s the first question.And regarding the outlook and Europe’s weight, I guess the short answer is yes to your question. Of course, the cautiousness around Europe that I expressed before is a part of our light vehicle growth of around 3% that is the basis for our organic sales is there. So, yes to your second question.Hampus Engellau And may be on that, is it for what you see in your customer base or is it just a general thinking surrounding the European economy and all of that that makes you more cautious?Mikael Bratt I think it’s a combination of the two. But of course it is very much connected to the customer interaction, I would say.Hampus Engellau Thanks.Operator We are now going to proceed with our next question.
And the questions come from the line of Vijay Rakesh from Mizuho Group. Please ask your question.Vijay Rakesh Yes, hi. Just a quick question. On the – when you look at the global LVP, 3.7% this year, what slowdown are you assuming for the U.S. like second half on first half? And any thoughts on Europe if U.S. slows down? I’m just wondering what the assumptions are.Mikael Bratt No, I think our – I mean distribution of our number is not very much different from what you see from S&P Global. I would say, if you see the different ways from the region tariff it ties into to our U.S. well with maybe the exception that we are a little bit lower on Europe, as we said, but that has affected around 3% instead of 3.5%. So it’s already in there.
In terms of regional mix, it doesn’t differ too much.Vijay Rakesh Yes. And then on China, obviously, it looks like they are assuming a pretty strong growth. Are you assuming any subsidies from China, either on the EV side that drives that LVP in China through the back half as well?Mikael Bratt No, it’s nothing we see or story here, and I have on radar screen here. I think overall, we see a high level of activity in the Chinese market here. And as you know, the Shanghai Auto Show is currently ongoing here this week. So a very dynamic market, and we are – I would say, positive to the Chinese LVP…Vijay Rakesh Last question.Mikael Bratt Yes, go ahead.Vijay Rakesh Last question, I know you mentioned 90% of the products have been negotiated with the cost inflation side.
Broadly, is there a way to look at what the pricing tailwind would be from the cost pricing negotiations as you run through 2023 because some of these pricing have continued to go up. But just wondering broadly, what’s the ballpark pricing tailwind?Fredrik Westin Well, it’s more than 90%. We haven’t said the exact number, but it’s more than 90%. I think the indication we can give is that in the 15% organic growth, we still assume around 3% global LVP. We’ve said around 3% in content per vehicle, and then the remaining to come from pricing and from market share gain and that pricing would be the larger of the two components. And I think that’s as much as we can say on the pricing contribution.Vijay Rakesh Okay. Thank you very much.Fredrik Westin Okay.
Thanks. Operator We are now going to proceed with our next question. And the question comes from the line of Erik Golrang from SEB. Please ask your question.Erik Golrang Thank you. I’ll start with two questions. The first one is a follow-up on the pricing comment. If it’s around 5% for the year, how much was pricing up in the first quarter here since you say that there’s more to come. And then the second question on the expectations of LVP stability and visibility improving. I guess that’s completely out in your hands, right? So if that doesn’t happen, how much lower would the full year margin be?Mikael Bratt Let me start with the second question, and Fredrik can take the first one there. I mean in our guidance, of course, we are aware of the market situation here, and we are working hard to manage it.
So of course, volatility is here, even though we think it’s going to improve. Of course, we need to improve our way to work in such an environment. And I think last year, you saw that we had a significant premium freight. We don’t have that this year. And of course, the quarter that is that we have been improving. And I would say, added on support in our plans to create more stability in our own production to offset that constraint from our customers here.So we find a way to operate in such an environment. And as we move to – we continue to improve that work. It’s not as, Fredrik alluded to before, optimal at this point in time. But the combination of improving and stabilizing what we see from our customers and our own ability should support what we are talking about here in terms of full year guidance.
I don’t see any reason why we shouldn’t be able to contain that volatility that we’re talking about here within our framework here. So, I feel comfortable with the current situation.Fredrik Westin Yes. And then on the pricing side, I mean, I think we need to refer back to what we said after the fourth quarter earnings for this year. And the way that these negotiations go is that we need to have the cost increases in our cost structure first before we can then get the compensation from the customer. And that has now happened here in the first quarter. As we’ve indicated, the two largest components of inflation that we are facing is – so the impact of the non-raw material-related inflation in our supply base and then the labor cost inflation in our own operations.
And those have materialized in the first quarter already with not so much compensation that came in from the customer side. So pricing has remained relatively flat sequentially.Erik Golrang So the vast majority of that 5% is not yet in the books.Fredrik Westin Correct.Erik Golrang Okay. And then a final question on these – the drag from new volumes or new contracts ramping and there being weaker leverage on that initially. I mean that’s something we’ve seen that a couple of times historically. And how I guess you always need new volumes and new contracts to grow over time. So why is that – is there anything you could put a number or frame how much there is the sort of share of new contracts or new volumes this quarter compared to an average or something like that to put it in perspective?Fredrik Westin Well, I don’t think I need to explain why they have initially lower profitability.
But the contribution from these launches have been significantly larger in this first quarter than what you would typically see. In LVP, it’s up 6%. Our volumes are up significantly more than that. And that’s – it was a larger part of the volume growth that came from these launches than in a more normalized quarter.Erik Golrang Okay. So – but that means that the higher outperformance that lower the leverage. Is that always how one should think about it?Fredrik Westin Initially, yes.Erik Golrang Thank you.Operator We are now going to proceed with our next question. And the question is come from the line of Michael Jacks from Bank of America. Please ask your question.Michael Jacks Hi, good afternoon. Thanks for taking my questions. Maybe the first one, following on from Fredrik’s comments on the factors that you consider when deciding on the pace of share buybacks.
Would it be fair then to assume that there should be somewhat of a linear relationship between your margin and cash evolution through the year and the execution on the program?Fredrik Westin Yes. I don’t want to talk to you now about how it develops by quarter. But I think you can look at our normal seasonality and the margin progression that – we’re also indicating here for the year. And I think that’s – those two together gives you maybe also an indication about how the cash flow generation will look per quarter. Then of course, we will be – as I said, it’s not only, say, profitability, but then also means the leverage ratio, which is clearly connected to that, but also the cash flow and the visibility we have in the near term on the market development and our own business development.
So yes, somewhat, is maybe my answer to your question.Michael Jacks Right. Understood. And then I guess, we’re all now very well used to watching out for downside risks to likely production, but the aggregate unit sales ambitions of the OEMs for this year clearly require perhaps an even higher LVP growth than what S&P is expecting. Just curious if this delta is perhaps visible in the production schedules that your customers have provided to you for the coming quarters.Fredrik Westin I mean if I look at what we see for the first quarter that the production volatility is still around us. It’s in – the vast majority of the case is that deviation is on the downside. So meaning that the EDI call-offs we get are then revised downwards for the vast majority of our customers.
So maybe that’s an indication of where that delta then fits going forward.Michael Jacks So they start the quarter then really high and then cut back as the quarter progresses; is that the trend?Mikael Bratt Yes, definitely, and very few deviate on the upside, yes.Michael Jacks Yes. Thank you.Fredrik Westin But at the same time this is not the new phenomena, so it’s normally how it looks.Michael Jacks Thank you.Operator We’re now going to proceed with our next question. And the questions come from Mattias Holmberg from DNB. Please ask your question.Mattias Holmberg All right. Thank you. A bit of a philosophical one perhaps, and if we look at your customers, the OEMs, where you see some of them basically cutting prices as if it was going out of fashion.
So it would be interesting to hear if you can share your view on how lower final selling prices for light vehicle works its way through the value chain, and perhaps more importantly, explain the logic on how you sort of, or meant to raise prices when your customers are generally cutting prices at this point? Thanks.Mikael Bratt Yes. This is a philosophical question here, but first of all I think what we are talking about here with our customer is not anything else than the inflationary components of doing business in this industry here. So we’re coming with request here to offset external factors. I think in the same fashion that we are being hit with the inflationary costs, then going through customer we have the [indiscernible] before we have, let’s say, the negative impact first, and then we get compensation when we [indiscernible] evidence here in our negotiations.
