French carmaker Renault SA said Friday that vehicle sales rose 2.2 per cent last year and predicted growth of at least 10 per cent in 2008 as the company's turnaround strategy gathers pace.

The return to growth last year follows a 4 per cent contraction in 2006 as a lack of fresh models kept customers away from Renault's showrooms.

Renault chief executive Carlos Ghosn is trying to turn the carmaker's fortunes with new models such as Twingo super-mini and Laguna upscale sedan. He targets an extra 800,000 vehicle sales by 2009 from 2005. But the lacklustre performance in 2006 means Renault needs at least 15 per cent sales growth in 2008 and 2009 to reach its goal.

Patrick Blain, head of sales and marketing, said in a Paris news conference that 2008 will be a ``critical'' year.

``We are stepping up the product offensive'' with the launch of nine new models, up from six in 2007, he said.

Like other European automakers, Renault has been squeezed by cutthroat competition at home and higher raw materials prices _ all set against the backdrop of flat local demand for cars.

In 2006, Ghosn unveiled plans to take the carmaker upmarket, slash costs and raise sales volumes. He predicts the result will almost double Renault's operating profit margin to six per cent by 2009.

Nomura Securities analyst Michael Tyndall said Renault's expectations for this year, if achieved, ``will prove that Carlos Ghosn's strategy is successful.''

He added: ``It gets easier for them in 2009.''

The results came after Nissan Motor Co., in which Renault owns a 44 per cent stake, reported a drop in U.S. sales last month. Nissan shares plunged more than nine per cent on the news, which ``spooked'' traders in Renault, Tyndall said.

Renault shares fell 5.8 per cent to 88.16 euros (US$130.06) in Friday trading in Paris.

Blain said Renault has no plans to enter the U.S. market and is currently discussing whether to go into the Chinese market.

Despite the sales increase last year, Renault's share of the world market for cars and light commercial vehicles slipped to 3.6 per cent in 2007 from 3.7 per cent in 2006.

In 2007, Renault sold 2.49 million vehicles. Global sales of the Renault brand increased 1 per cent. Dacia, a Romanian subsidiary that makes the low-budget Logan family, reported a 17 per cent sales increase, while Renault's Korean unit Renault Samsung Motors sales fell 1.4 per cent.

In Europe sales fell 4.1 per cent, including a 1.8 per cent drop in France. Still, Renault said it returned to growth in the region during the second half, with an acceleration in the last quarter.

Blain said the success of the Logan is helping lessen Renault's dependence on the European market. International sales made up 35 per cent of the total in 2007, compared with 11 per cent in 1999. In 2007, sales outside of Europe grew 16.5 per cent.

Sales of the no-frills Logan jumped 48 per cent to 367,745 units. The vehicles were initially targeted at emerging markets but are increasingly popular in Europe.

Full financial results will be published Feb. 14.

The French carmaker's cross-town rival PSA Peugeot-Citroen reports commercial results for both of its brands on Tuesday.