To give you an update on this situation, it’s been progressing well. We are consuming and selling down those stocks as we plan and already the new model year 24 Rogue is already being and already in the dealership. So the reason I’m confident on Q4 volume is because the Q4 volume has the new model year 24 Rogue, which has refreshed exterior and also better connectivity solution with Google built in. We also have a new model year 24 Sentra. We have improved logistics and deliveries from Mexico. So you can probably look at industry data and see that our January dealer stock and company stock are very healthy. So we have plenty of cars to sell and the sales in January was going as planned. So that’s why Q4, on top of that, we have these new models.
We took care of the model year 23. Our competition was already in November selling model year 24. So we were a little bit late in the model year transition. That’s what really happened in Q3. Obviously, this will not repeat again in next year. We will make sure we address this problem. And then on top of this, Q4, the sales volume, seems big if you just compare versus Q3. But as I mentioned, Q3 is a little bit low because of logistics and also model year 23 slow sales in the beginning of the quarter. Then we ramped up. But on top of this, in Q4, we have also many contracted sales with very good commercial fleet and also rental orders that we signed early in the year that we’re going to be delivering in Q4. And to anticipate your next question is, wouldn’t that hurt our profitability?
No, I don’t think so because those contracts, we were able to secure pretty good. So there’s no deterioration versus our retail sales in terms of profit per unit. Actually, some of the deals on the fleet is actually better. So that’s why, given all of this, I’m sorry for a long answer, but given all of this, we do see that Q4 sales in North America and particularly in the US, we should be able to do pretty well. And also in January, we already saw that some of the competitors who increased the incentive aggressively in November, December, they sort of pulled back a little bit while we kept it. We kept our strategy. So that’s why we think we are very much encouraged by the pace that we have right now. For your second question about Auto free cash flow, it’s very simple.
In Q3, it’s inventory. As I mentioned, it’s just two issues. One is the logistics. Two was that we typically produce more in Q3 as historical seasonality, we sell much more in Q4. But to produce all the cars we need to sell in Q4, we don’t have enough capacity within Q4 to produce and sell. So we actually intentionally, historically, we always build our production in Q3 to make sure we have healthy inventories for Q4 sales. So the reason, if you look at the Q3 standalone free cash flow, if you go back many years of Nissan history, usually Q3 free cash flow is lower or sometimes negative because of this phenomena. So there’s no other issue within the free cash flow other than the inventory being higher. So for year-end projection, as I mentioned, the inventory already peaked out in December, January, and it’s already being consumed for sales in February and March.
So, Nihonyanagi-san, two — sorry, very long answers to your two questions, did I address all your points?
Kei Nihonyanagi: Yes, that was very clear. Thank you, Mr. Ma.
Operator: Okay, moving on to Goldman Sachs Securities, Yuzawa-san, please.
Kota Yuzawa : Yes, this is Yuzawa from Goldman. Do you hear me?
Stephen Ma : Hi, good evening.
Kota Yuzawa : Yes, hello. You elaborated on the U.S. operations. So now, another important market, China, could you update on Chinese situation? Because of the circumstances, all the car makers were increasing the production volume, but looking at the competitive landscape today and for the MTP, how are you going to revive the Chinese operation? Could you give us a clue on this? That’s the first question. And the second question, in the Renault’s agreement, you bought back 5%. What was the background here? And the remaining 23% that Renault holds, how will it be addressed? And Ampere IPO, this was canceled, right? So how will this affect your strategy in the investment in Ampere in relation? This is one big question for Renault relations. Thank you.
Stephen Ma : Sure. So for China, as you saw, the market situation in China is very intense. The price war, to be honest, is a bit crazy. And we made sure we were disciplined and making sure that we were not just blindly following in the first three quarters. And then — but just doing business as usual doesn’t work in this environment anymore. So we changed and updated our strategy to be much more tactical and more focused strategy in Q4. We started actually in September. So instead of trying to fight head-to-head with all the Chinese local brands which brought all these new brand new battery EV or plug-in hybrids, et cetera, which we currently don’t have products yet, but they will come. So instead of trying to fight them in those very fierce battle markets, we turn our focus on markets where customers still prefer very much more ICE or the confidence or, how do I say, the trust with established brands.
So we intentionally went straight to those markets that were much more receptive to us. And then we also make sure that we provide competitive offers to those markets. So that’s what we did. So we focused not so much on the big cities like Shanghai and Beijing, where it is just very crazy competitive with a bunch of new energy vehicle. But we went to more tier two, three, four, five cities where Nissan brand is very much valued still and has a very high reputation. So we focused very much on those cities. So we had targeted offers for each of the different provinces. And then also we made sure that we wanted to be competitive, especially as people buying cars for Chinese New Year. So, by the way, Happy Chinese New Year, it’s actually happening today, tonight.
So what we did is typically Chinese customers, especially lower middle class, like to buy new cars right before Chinese New Year to drive the new car back to the home in countryside or the homes outside the big cities. And they already heard a lot about the difficulties with having EV for long trips and also severe cold weather. So they really flocked to our cars because they viewed our cars as much more dependable, fuel efficient, safe, and also a very good feature. So we intentionally took advantage of this and we focused very much on strategy for this kind of sales. So it seemed to have paid off and we are working and it’s working so far. Going forward, obviously, the battle for the car sales in China continues. We still see continued escalation in some of the office buy, especially the newcomers.
And they keep trying to buy market share and gain market share via just spending a lot of money. But for Nissan, of course, we want to stay relatively competitive. So we will make sure we enhance appropriately, but not too much. But make sure that we are targeting the right audience. And as mentioned previously by Uchida-san, we have already pulled ahead our plans for four new energy vehicles, the first one of which will be launched later this calendar year. So I cannot give the exact timing yet, but it will come later this year as a Nissan brand. So that’s our strategy for midterm. And for long term, we already started very seriously on working on a much more detailed offering, a comprehensive offering for the China market. And I think Uchida-san will touch upon this a little bit more when he unveils the mid-term plan.
So that’s for China. For the second question about the share buyback and Ampere situation, so we bought back roughly 4.9 some percent, almost 5%. And this was in December, this was obviously decided by Renault. Any share sell down from the trust is all up to the discretion of Renault, as they see fit. So but we always maintain if they want to sell, we’re willing to buy, which is exactly what we did. So when they approach us and say, hey, do you have any appetite for some share buyback? I said, of course, how much? So immediately we jumped on it and we made sure we bought back. And we, within a few days, we also canceled our shares to improve the shareholder return. So that is for December. How much or when Renault will sell in this year or next year?
I have no clue. This is completely up to Renault. It’s up to them to decide. And when they feel ready and they want to do, they will inform us and call us and we will be ready. Depending on how much they want to sell, we will decide appropriately at that time. So for the Ampere IPO, obviously, I think it’s pretty apparent the condition for IPO is not so good these days. So I completely understand their reasons for not going forward with IPO. But as I mentioned previously, actually our relationship with Renault has improved and is getting better. And all our collaboration project with them are progressing as planned. And we are very much looking forward to the compact EV, which Uchida-san I think unveiled, well, he showed a concept version of it a couple of months ago in London, I was with him.
But that compact EV will be developed by Ampere for us according to our specs. So therefore, we are very much looking forward to it. That project is on track. And I think that will, I cannot tell you the timing of it, but it will come soon. So we will hopefully have that ready for sale in the European market. In terms of Ampere and what our initial intention with that is, as we said many times before, Ampere is a good investment opportunity as it helps us and complements our strategy in Europe. We already have a good lineup, X-Trail, Qashqai, Juke, LEAF, and we will have refreshed models like just like we showed recently with the new e-POWER, X-Trail, Qashqai and hybrid and Juke. But going forward, there are more things that the Renault Group or Ampere might be developing for EVs. And it’s a good way to collaborate to help us meet the very fast electrification trend in Europe.
So we are, of course, working with them and there are actually more potential projects in the pipeline. So as our position always been, if it makes sense, it complements and enhances our strategy. Of course, we are interested. So our position has not changed. And if there are some decision or further progress, we will let you know. I think that’s all I can say at this point in time. But the collaboration and relationship with Renault Group and Ampere is actually progressing very, very well.
Kota Yuzawa : Thank you.
