Mikael Bratt: I think in the Investor Day here in India we had a slide showing — I don’t have it in front of me here now. But there, you saw that we have come a fair amount in certain of our product families here, but still a lot of opportunities left. So, we have plenty of opportunities to continue this journey. I think in some of the product families, maybe we are in a 30%, 40% of the potential. So yes, plenty of room to capitalize on optimization and digitalization going forward. But I can refer to that slide in the presentation deck on the Investor Day that you can see in more detail.
Hampus Engellau: Fair enough. Thank you.
Mikael Bratt: Thank you.
Operator: Thank you. We will now take the next question from the line of Rod Lache from Wolfe Research. Please go ahead.
Rod Lache: Hi, everybody. I’d like to understand what your Q4 implied margin, your guidance of 11.5% to 12% suggests for the run rate of margin if we adjusted for seasonality because we know that Q4 is typically, I think, at least 100 basis points above average due to seasonality of recoveries, maybe a few other factors. Is that the case? Is that roughly the magnitude that we should be thinking about if we’re thinking about a run rate? And then you reiterated the 12% margin objective at an 85 million-unit LVP as long as it’s stable. So, S&P is already there. Could you quantify what the magnitude is of the inefficiency due to instability that you’re experiencing right now?
Fredrik Westin: Yeah, Rod. So, the seasonality in Q4 is not different this year than in other years. So, it’s, yes, around 100 basis points, 110 basis points that we also expect this year and then mostly of that is related to the engineering income that is seasonally higher in the fourth quarter. The rest of the margin increase is from the structural cost initiatives we’re putting in place and then the further development on the commercial recoveries with our customers. And then on the margin walk up, I think we have to come back on that. Nothing has changed from what we have said earlier at the Investor Day or in other discussions. It is the same logic that still applies to what we’ve said before.
Rod Lache: Yeah. I understand. I was just hoping you might just give us a sense of the burden that Autoliv is incurring right now from that inefficiency?
Fredrik Westin: I don’t think we’ve given a number before, and I don’t want to do that either now. But as Mike said before, here is that we actually saw that in some parts of the world, especially in Europe, the call of reliability went backwards in Q3. It was a good track throughout the year. And in, say, all other regions, it continued to improve. But unfortunately, Europe, it went backwards. It’s — and then it has very, very different types of how that manifests itself in our inefficiency. So, it’s very difficult to give a number. That’s why I would like to refrain from it.
Rod Lache: Okay. And just lastly, if the recall happens, as NISA is suggesting, it obviously makes sense that Autoliv would participate in some way, supporting your customers with replacement modules. Could you just, at a very high level, talk about what typically happens in advance of something like that? Do your customers ask for engineering work ahead of time? If this were to happen, what would you guess would be the earliest that you could accommodate the industry? And how long would the process of supporting the industry to do something of that magnitude take?
Mikael Bratt: I think it’s – I mean, to start with, the process would be that the customer engaged and request us to quote for such an activity and of course, then work with any engineering adjustment needed from our side. The specific details there is difficult to answer because it’s unique by customer and depending on our own product portfolio here and what needs to be done there. So that’s a unique case. But I think we have shown in the past that we are capable of supporting our customers in quite significant recall situations there. So, I expect us to be able to do that fairly quickly if this would happen here as well.
Rod Lache: Okay. Thank you.
Operator: Thank you. I would now like to turn the conference back to Mikael Bratt for closing remarks.
Mikael Bratt: Thank you, Sandra. I’m confident that we will deliver a substantial increase in sales, operating cash flow and adjusted operating income in the fourth quarter. We continue to advance of our structural cost reductions initiatives, and we see an improving position with fast-growing OEMs as well as continued gradual stabilization of supply chains. This forms a strong foundation for continued strong development in the years to come that support our midterm targets. Autoliv continues to focus on our vision of saving more lives, which is our most important direct contribution to a sustainable society. Our fourth quarter earnings call is scheduled for Friday, January 26, 2024. Thank you, everyone for participating in today’s call. We sincerely appreciate your continued interest in Autoliv. Until next time. Stay safe.
Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.
