Giulio Pescatore: Okay. Thank you. And you’re also not assuming a big pickup after the end of the strike, a big pickup in volumes.
Anders Trapp: Yes. I think some pickup if it goes through into basically Thanksgiving and then a pickup then to recover some of that volume in the fourth quarter. But again, it’s very fluid and it remains to be seen here how the overall volumes also develop.
Giulio Pescatore: Okay. Thank you. Then the second question on the [indiscernible], is it fair to say that you stand to benefit way more than you start to lose out of this recall. Both in terms of the potential replacement impact and in terms of the long-term implication with regard to pricing if one of your competitors was to suffer. And that’s the first part of the question. And the second part is, can you maybe help us quantify the potential opportunity for you on the replacement side? Because it feels like it’s very significant, right? It’s over the course of 10 years, of course, but let’s say that the $52 million recall does materialize. Is it fair to say that you might have 50% share of that recall? And can you just help us understand the opportunity here if recall does go into effect?
Mikael Bratt: I think it’s too premature to speculate in that. As we all know, it’s not in that stage yet, and there is work with NISA and of course, ARC and the customers that is ongoing. So, we are standing by and willing to support our customers if needed, but it’s too early to start to talk about any numbers or potentials and so forth in this. We just have to wait and see here.
Giulio Pescatore: Okay. Understood. Okay. Thank you.
Operator: Thank you. We will now take the next question from the line of Agnieszka Vilela from Nordea. Please go ahead.
Agnieszka Vilela: Perfect. Thank you. So, starting with the EBIT bridge, I note that probably for the first time in nine quarters, you reported positive impact from raw materials, a moderate one, but still positive. So, could you please maybe talk about some deflation that you see in your cost input and what it is related to? That’s my first question.
Fredrik Westin: Yeah. Correct. It’s the first time in a long time here that we see a positive effect on raw materials. We have guided for a flat development for the full year, which means that we should see an even stronger positive development also in the fourth quarter. So yes, we do see that raw material prices are coming — or costs are coming down for us. So far, it’s been mainly driven by non-ferrous materials, especially magnesium, that has come down from the peaks, but also steel has been favorable, but we have seen still some increases this year, especially on the textile side. But we also expect that this should be more favorable going forward. Then on what this means for next year, as we said before, we have this six months to nine months’ time lag between where spot prices or indices are moving until that manifests itself in our cost structure.
So, we are monitoring very closely what that means, but we’ll talk more specifically about that with the guidance for next year.
Agnieszka Vilela: Great. Thank you. And just to understand a follow-up on that. Will your customers require then price decreases because of lower input cost for you or how should we think about it?
Fredrik Westin: Yeah. We do expect that we will then also give some of those price decreases back to our customers. And then we have a higher level of pass-through clauses with the customers now. So yes, when raw material costs come down, we then also adjust our prices accordingly. But that should have a favorable impact on the margin because it was margin dilutive on the way up, and then it should be somewhat accretive on the way down.
Agnieszka Vilela: Perfect. Thanks. And then my second question, I think, Mikael, you mentioned that the car production in Europe so far is secured by backlog, but you see demand abating and also order backlog shrinking going into 2024. And if color you could provide to us when you speak to your customers in Europe in regards to their production planning?
Mikael Bratt: Yeah. I think – as you know, the problem we have here is that even if we have visibility, the pickups is deteriorating. So, it’s in a short-term perspective where we have the challenges within the week. Otherwise, I think when it comes to the overall production planning, there is nothing indicating that we are looking at the weaker European market. I think what is happening is, of course, that after all these years of backlog buildup, that is now normalizing. So, I would say, from a consumer point of view, we have nothing indicating that we should have lower volume due to that. And I think we are seeing more normalization of backlog and volatility coming from the supply component issues that we have talked about earlier. So that otherwise, we don’t see anything.
Agnieszka Vilela: Thank you.
Operator: Thank you. We will now take the next question from the line of Hampus Engellau from Handelsbanken. Please go ahead.
Hampus Engellau: Thank you very much. Two questions from me. First, Mike, if you could maybe talk a little bit about the development in China with the local OEMs quite healthy growth there. How much is this driven by better electric cars coming into the market and exports and how much is it driven by, I guess, more competition in China on being more safe.
Mikael Bratt: A quick note on that. I don’t think I have a number for to give you the breakdown, what is driven by what there. But as you said, we see export growth for Chinese OEM increasing quite significantly to, yes, mainly China, Asian countries, you could say, but also to Europe there. And also, the overall ambition from the Chinese OEMs here to increase the safety content. And I would say quite dynamic market here where their requests for new innovations together with us to improve content is a great growth opportunity for us here and good collaboration here with our Chinese OEMs here. So, a strong position for us in China altogether there.
Hampus Engellau: Fair enough. Maybe a last question then for me is, in this process of the automization and digitalization of the production, would it be possible for you to maybe share some back on where you are in that process? How far have you come and how much is left?
