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Renault relies on Brazil, Russia for sales growth

By Helen Massy-Beresford and Gilles Guillaume

PARIS (Reuters) - Renault reported a 1.9 percent rise in vehicle sales in the first half, as strong growth in Brazil and Russia made up for a weak performance in Europe where the French automaker suffered from supply problems.

The group, whose brands include Renault, Samsung Motors and Dacia, is the latest European automaker to see brighter prospects overseas than at home, where economic uncertainty and austerity measures are threatening consumer spending and growth.

"What is clear is that Renault is doing a good job outside of Europe. In Europe, they are suffering because they have a lack of new products," Exane Paribas analyst Thierry Huon said.

Shares in Renault closed down 3.5 percent versus a 3.1 percent sector <.SXAP> drop.

The automaker, which aims to make 43 percent of its sales outside Europe this year, has said two key European models are due for overhauls, with a new version of the Clio compact due next year and the smaller Twingo later this year.

Leading domestic rival PSA Peugeot Citroen , whose shares were down 3.8 percent, is slated to issue first-half vehicle sales on Tuesday.

Renault is also due to launch three of its planned range of four electric vehicles (EVs) later this year and new Chief Operating Officer Carlos Tavares told journalists the car maker was confident in its outlook for that segment.

Renault and alliance partner, Japan's Nissan Motor <7201.T>, which are jointly investing 4 billion euros in the technology, see EVs accounting for 10 percent of new car sales by 2020. Some rivals call that prediction optimistic.

Renault's Kangoo multi-purpose vehicle, Fluence sedan and Twizy two-seater EVs go on sale later this year, while Nissan's Leaf small car is already on the road.

Renault last week said it would delay the start of battery production at its Flins site near Paris until 2014 from 2012, and would proceed without the government investment and loan it had planned for the project. But the company said the battery delay would not affect the wider EV project.

Speaking at an event to present the results of an EV pilot program at the Flins site, Tavares said he was "very confident" about the company's EV forecast.

"What I'm observing, is that since that forecast was announced ... we have seen a very significant number of other forecasts, and all those forecasts increase the proportion of these vehicles compared with the total market as they go along," he said.

SUPPLY DIFFICULTIES

Renault said group sales outside Europe rose by 20.4 percent to 542,411 vehicles in the first half, in sharp contrast to sales in Europe, which fell by 7.4 percent.

The share of group vehicles sold outside Europe grew by 6 percentage points to 40 percent, helped by Brazil and Russia, in line with its target. In February, Renault said 45 to 50 percent of its sales should come from outside Europe by around 2013.

Renault said supply difficulties that had weighed on its sales in recent months -- which were not related to the Japanese earthquake but to problems with suppliers ramping up capacity after the financial crisis -- should start to ease from July.

It predicted a 3 to 4 percent rise in worldwide sales volumes in 2011 and stuck to its forecast for Europe to lag the global trend with sales flat to down 2 percent fall.

In January, Renault had forecast a rise in the global market of more than 4 percent.

Renault also said on Monday it now saw a 4 to 6 percent fall in its home market compared with a previous prediction of an 8 to 10 percent drop.

Commercial director Jerome Stoll said Renault group vehicle sales would rise this year compared with 2010 and rise again in 2012. The group is targeting sales of more than 3 million in 2013 as part of a strategic plan unveiled in February.

Renault first-half car and light commercial vehicle sales rose to 1.374 million, driven by a strong increase in sales outside Europe.

Among Renault's own product lines, its low-cost Dacia brand car and light commercial vehicle sales fell 2.9 percent, while Renault brand vehicle sales rose 5.7 percent in the first half and sales of Renault Samsung Motors cars fell 35.6 percent.

World sales of light commercial vehicles, which have higher margins so help automakers' profitability, grew by 12.7 percent in the first half to 181,559 vehicles across the group's brands.

(Additional reporting by James Regan; Editing by David Holmes and Erica Billingham)

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