Renault maps route to regain pole position

The French car maker Renault will develop a luxury range and boost car sales by nearly one-third under a strategy unveiled yesterday to grow its way out of a slump that saw core 2005 profits fall more than expected.

Sports utility vehicles and other offroaders will also be among 26 models the Renault group plans to introduce between 2007 and 2009 to help swell annual sales by 800,000 units and try to make itself Europe's most profitable mass car maker.

The plans represent a move by the Brazil-born chief executive Carlos Ghosn to overhaul Renault's strategy, polish up its model line-up and widen its regional reach to counter declining core financial performance at Europe's third-largest car maker. "Renault is not in crisis but remains fragile," Mr Ghosn said, foregoing for the time being any US-style job cuts or plant closures. "Renault does not need restructuring at the moment. What Renault needs is growth, new products and a good brand image."

A new Laguna model due in 2007 will be the group's test to re-enter the luxury segment of cars that cost more than €27,000 ($18,558). Mr Ghosn said the new Laguna - poised to compete against the likes of the BMW 3-Series, Mercedes-Benz C-Class, Audi A4 and Honda Accord - had to be among the best three in its class.

Renault reported2005 gross operating profits of €1.32bn, down 37.4 per cent from 2004.

Analysts welcomed the decision to move into new models to broaden its product range, but said the luxury market could be tough to crack because of fierce competition, as Volkswagen's foray with its high-priced Phaeton model had shown.

Renault, privatised in 1994 after a failed merger with the Swedish car maker Volvo, has been overly dependent on its home market and the Megane, launched in 1995 and still Europe's best-selling family of cars.

Mr Ghosn said he wanted to sell 3.3 million cars a year by 2009, versus the 2.5 million sold last year.