Renault hit on home ground

Sales of Renault's Megane range have disappointed

French car maker Renault, reporting a slip in sales, has admitted surprise at stalling global car sales.

In the first three months of the year, the markets "were a bit more difficult than we had predicted", commercial director Francois Hinfray said.

The news came as rival Volkswagen revealed that it would halt production at its main German plant for three weeks next month, adding to fears over the health of European carmakers.

But VW, Europe's biggest car firm, said the slowdown in the German car market "is not that dramatic", and played down the impact of the closure.

"This is a perfectly normal summer vacation," VW spokesman Peter Sclelein said.

"We can choose between reduced activity in the summer or a more compact vacation period. This summer we opted for the second solution."

The closure will be the first in three years.

Core operations

Renault's overall data, including production at divisions includes the South Korean Samsung marque and Romanian Dacia brand, showed sales down a modest 0.7% to 1.26 million cars.

But firm's core operations suffered a more substantial downturn.

Sales of cars carrying the Renault badge, Europe's biggest selling marque, fell by 3.3%, almost the rate of twice of contraction in the overall market.

And in the French-based group's home market, the firm's shares of car sales fell by 1.7 points to 28%.

Sales of the Megane model, which competes in a sector marked by the launch of the Peugeot 307, proved especially disappointing, Renault said in a results statement.

"Are we satisfied with this performance? If these were the results for the full-year, the answer would be most certainly no," Mr Hinfray said.

But the firm predicted an upturn of sales in the second half of 2001.

The group is to increase its production of diesel engines, which are proving increasingly popular in Europe, and offer Megane promotions.