French carmaker Renault posted forecast-beating first-quarter sales and confirmed its target for positive free cashflow in the year as a whole, while warning of a difficult economic environment.

Carmakers whose sales have been buoyed by government scrappage incentive schemes are worried about the effect on car demand when the schemes peter out.

The French carmaker on Tuesday confirmed an earlier forecast of a 10 percent decline in the European market as a whole this year.

Renault said it was on track to meet its 2010 objectives of positive free cash flow and an increase in market share. Its global market share was up 0.37 points in the first quarter.

Asset sales would play a role in meeting the positive free cash flow target, Chief Financial Officer Thierry Moulonguet told a conference for analysts.

We also know that asset sales will play a role in this process and from my point of view, we have some flexibility and we were certainly encouraged by the recent evolution of the share price of Volvo  after a good results presentation for Q1, Moulonguet said.

Renault has repeatedly said its 20.7 percent stake in the world number two truckmaker is not strategic, but Carlos Ghosn said earlier this year he would not be rushed into selling assets if the time was not right.


Renault shares rose strongly on Friday after Volvo's better-than-expected quarterly results, which revived speculation that the French carmaker could sell its stake.

I will say that we still have this flexibility that we will be using when we judge most appropriate, Moulonguet added.

Renault, which with its Japanese alliance partner Nissan earlier this month signed a cooperation deal with Germany's Daimler, said revenue reached 9.07 billion euros in the first quarter, compared with 7.07 billion in the same period a year earlier, when the crisis was raging.

First-quarter revenue had been expected to reach an average of 8.8 billion euros, according to a Reuters poll of eight analysts.

Revenue from the automobile division amounted to 8.64 billion euros in the first three months of the year, up 30.3 percent on a like-for-like basis.

PSA Peugeot Citroen, Europe's second-largest carmaker, last week posted a 27.5 percent rise in first-quarter sales and said it saw a significant first-half operating income.

Renault shares ended 3.9 percent lower before the sales were published, in line with the CAC-40 which was down 3.8 percent.

(Editing by David Holmes)