Kei Nihonyanagi – Bank of America Merrill Lynch: [Interpreted] Yes, thank you for your valuable time. I am Nihonyanagi. I have two questions. The first one, this is related to the previous question, Page 33. In U.S., volume and mix, in this volume mix for the mix, in the second quarter there is a big negative factor from the mix. What’s behind this? Could you analyze? Could you elaborate on this? What’s behind this mix? Negative contribution since the past. Model mix has been deteriorating. But in the full year, having said that in full year, we thought that it will be stable or will be on the positive side. But is this due to production confusion and this can be recovered in the second half of the year or the market circumstances changed and do we need to address it, could you elaborate on this the mix effect?
That’s my first question. And the second question, well, this is related to my first question, U.S. market. You didn’t talk about U.S. market in details, how do you assess the U.S. market in the second half of the year and next fiscal year? What’s your projection for the U.S. market? Because macro-economy wise things are uncertain. And according to auto data, I find out that Nissan’s monthly performance seemed to be – that incentive seemed to be normalizing that’s one way to look at it so based on what do you see? What’s your assessment in terms of sales incentives? What’s the outlook? That’s my second question. Thank you.
Makoto Uchida: [Interpreted] Yes, the second question in U.S., we continue to see the TIV which is growing. That’s what when they anticipate, because of interest rate rise, there are some risks. However, we believe that there is an opportunity to increase our presence. Having said that, mix is changing as we have said last time. Affordable cars are where we see a stronger demand for, and affordable cars correspond to Versa or Sentra in our lineup. So the profitability of these cars are worse than the higher end, but there are still strong demand. So Mexico, we are increasing the production in Mexico to address this. So this will translate to supply and better presence. That’s what we pursue. And the basic volume, fundamental volume in the past, fleet in rental especially, we tended to see a lot of challenges, but here again, there are good ways to manage it.
So including this U.S. operation, we expect this U.S. operation is where we see an opportunity to increase our presence. And beyond this, IRA and addressing the regulations is becoming an immediate challenge for us. And on this point, as I said, in MTP, just an example, IRA in U.S., ZEV or TS4 [ph], that’s another thing that we need to consider. In this environment, with the regulations are enacted, what kind of strategy should we have to promote electrification with competitiveness. That’s what we are considering and we are building plans to address it. And the first question, Stephen?
Stephen Ma: So as we just mentioned, the reason in mix is negative, is because the environment in the U.S. market has changed. Given the high inflation and the higher interest rate, the consumers affordability is no longer what it used to be a year or two ago. So they are no longer able to afford a slice of a car, because with the highest interest rate, the monthly payment will be higher if they buy too expensive car. So now to keep the monthly payment the same with the higher interest component, they have to downgrade to a lower segment. So that’s what we are seeing quite a bit. A lot of the customers moving down into the sedans and smaller cars, actually, it’s not bad for Nissan, because they are very strong in Altima, Sentra, Versa, Kicks.
So, as Uchida mentioned, many of these cars, Sentra and Versa, we are producing in Mexico and we are maxed out in terms of production level. So we are trying as much as we can to produce as many as we can. Our inventories on these models are very, very low. So we are trying to meet the demand of the U.S. consumers right now. But this is purely a mechanical calculation, because the market is shifting to more affordable cars. Of course, at the same time, we are still trying to make sure we keep the volume in the higher end, SUVs and premiums. This is why I highlighted in the presentation that INFINITI brand grew 50% year-over-year. We are still making sure that we are keeping the volume high on those vehicles and, therefore, keep the customer engaged at the higher segment.
For those customers who can afford it, we are still making sure that we have good sales in the area. So that’s how to explain the mix. And for the second half and next year, as Uchida has mentioned, I will not elaborate on that, but I do want to highlight something about auto data and any external data you have on incentive. Those external sources, sometimes when they collect information from incentive, about incentive about OEM, they do a sample test and they do extrapolation and estimation of the number of incentive we have. It’s very different actually than what we have internally. That’s what we actually spend. And just for you to know, I repeat what we said last quarter. Most of our incentive, in case it’s like 80% or 90% of our incentive is spent on self-finance.
We do not spend – we spend very little now on cash incentive for customers. We want to help given the higher interest rate. We use our incentive to provide more affordable interest rate products, loans and leases for our customers. So we do that, so we buy down all the interest rate for them so that they can have affordable. The way by doing that we keep the customer in our self-finance capital business, and we can engage with customers for a longer time. So it’s actually better, a much more healthy way of spending incentive. Is that okay? Do you have another question? Is that clear?
Kei Nihonyanagi – Bank of America Merrill Lynch: [Interpreted] Sure. Yes, that was very clear. Thank you.
Makoto Uchida: [Interpreted] Okay, thank you so much.
Operator: Moving on to UBS Securities, Takahashi-san. Go ahead.
Kohei Takahashi – UBS Securities: [Interpreted] Yes, UBS Securities. My name is Kohei Takahashi. Do you hear me?
Makoto Uchida: [Interpreted] Yes, we do. Go ahead.
Kohei Takahashi – UBS Securities: [Interpreted] Okay. Talking about the short-term, China, between July and September in third quarter, what are the results? Retail volume and production volume are given to us, but how about the profit? Listening to you, it seems like prices are increasing and the competition is intensifying and the new car impact will come later, so it seems like the profit will largely deteriorate. So could you elaborate on the guidance of the profit? And at the same time, other car makers are putting expenses on the restructuring or they are reckoning the retained earnings that will deteriorate, but according to your plan, you didn’t make any revision. Is this because you are revising your MTP, so that is why, for example, you haven’t incorporated restructuring fee or in the second half of the year, the contribution profit for China will not deteriorate largely.
Is that the message of third quarter and what’s the second half that we should expect?
Stephen Ma: Yeah, so Takahashi, let me address those points. Yeah, the volume as you can see in Q3 we show on Page 11 is come down in July to September period and I think, yes, we’ve done as much as possible internally to already do streamlining, reducing fixed cars and trying to reorganize ourselves as much as possible internally to get through this very intensive price war. Just for your reference, last year calendar 2022, I believe China market, the average transaction price dropped by more than 9%. And this year already as of October, we already dropped like 9.5% almost 10%. So in a matter of 2 years, transaction price dropped almost 20%. I don’t think any OEM make 20% profit margin anywhere in the world. So, I don’t think I need to say much other than saying that, yes, profitability for China is challenged.
