UPDATE 2-Renault promises return to sales growth this year

Fri Jan 18, 2013 9:32am EST

* Renault shares buoyed by sales growth target

* Resists government pressure for Nissan production

* Sees 3 pct global expansion in 2013 (Adds comments on Nissan production, detail, background)

By Gilles Guillaume and Laurence Frost

PARIS, Jan 18 (Reuters) - French carmaker Renault pledged a return to sales growth in 2013 while resisting government pressure to build cars in the country for alliance partner Nissan.

Renault shares rose after sales chief Jerome Stoll predicted a sales increase in all regions including Europe - despite a further 3 percent contraction in the region's auto market.

"Our objective is to win back market share," he told reporters.

Renault, like other European carmakers, is struggling with surplus capacity because of weak demand in Europe, where the euro zone crisis and government austerity has sapped demand.

The company this week unveiled plans to cut 7,500 French jobs over four years.

But the French government, Renault's biggest shareholder, wants the carmaker to support domestic employment by building cars for Nissan, its 43.4-owned Japanese affiliate. In a radio interview on Friday, Industry Minister Arnaud Montebourg said Chief Executive Carlos Ghosn had agreed to the move.

The Renault sales chief insisted there was no such commitment. "The decision is not taken as of today," Stoll said.

Renault's domestic plants are among the worst affected by car industry overcapacity that has swollen as many European countries have gone into recession. European car registrations fell to a 17-year low last year.

The company's deliveries fell 6.3 percent to 2.55 million vehicles in 2012, their first global decline since 2008, and dropped three times faster in Europe.

The carmaker has dangled the possibility of Nissan and Daimler production to keep plants running - but only in exchange for concessions from unions including a longer workweek.

HELP FROM NISSAN

In his interview with RMC radio, Montebourg said he had spoken to Ghosn, who heads both carmakers.

"Since you are also the head of Nissan, and Renault controls Nissan, Nissan should come to the aid of French factories and bring work to French production lines," Montebourg said he told the CEO.

Asked whether French Renault plants would build Nissan models, the minister responded: "That is what I asked ... The answer was 'yes'."

With its two board seats and 15 percent stake in Renault, the government is likely to press for French production of a Nissan hatchback originally planned for the UK.

Assembly of the vehicle is to be allocated to another European plant to make room for an upscale Infiniti model at Nissan's Sunderland site in northeast England.

But the Japanese carmaker is inclined to build the car at a more competitive Spanish facility, a Renault-Nissan source said this week.

"There is a lot of pressure on Renault to manufacture in France," he said. "But when we have got assets invested in Spain we will use them."

Renault shares were 2.7 percent higher at 1133 GMT after rising as much as 3.6 percent on the company's sales growth pledge. The stock has gained 26 percent over the past six months.

Renault's forecast of a 3 percent European market decline this year contrasted with a predicted 3 percent expansion for the global market.

The French carmaker expects plans for Chinese production to receive Beijing's formal approval in the first half, Stoll also said. (Additional reporting by Chine Labbe and Nicholas Vincocur; Editing by Christian Plumb and Jane Merriman)

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