Renault is expected to sign its strategic partnership agreement with AvtoVAZ in the next few weeks making it the third largest vehicle manufacturer in the world.

The resulting expanded Alliance (which already includes Renault and Nissan as well as the Romanian Dacia brand and Samsung in South Korea) would produce 7m vehicles a year, leapfrogging Ford into the number three position behind General Motors and Toyota.

Renault’s chief executive officer Carlos Ghosn said: “The bigger you are, the more you can invest and the more you can utilise in terms of common vehicle platforms, engines and transmissions, as well as production facilities and purchasing power, all of which makes you more efficient.”

Ghosn, speaking at Renault’s full-year results press conference, said Renault would take a 25% stake in AvtoVAZ which produces Lada vehicles in Russia.

Announcing a global sales increase of 2.1% and an increase in operating margin of 27.4% to EUR1.354m, Ghosn said Renault was on track to meet its four-year business plan, albeit with some clouds looming on the horizon.

These include a less-favourable macro-economic climate in 2008 plus exchange rate fluctuations which are also unfavourable. There is also a decline in the upper-medium car segment which is bad news for Renault’s recently-launched (and much-vaunted) European D-segment Laguna line.

Tax incentives in France and other western markets are driving people out of large family cars and into smaller models.

The new Laguna, on which Renault has staked its recent quality-improvement efforts, is a central plank in Ghosn’s Renault Commitment 2009 business strategy.

He said: “We will hit our commitment to get the Laguna in the top three models in its segment for quality by 2009, but the segment is in trouble.”

This has led to a slow-down in production at the Laguna assembly plant in Sandouville, France, where a planned third shift has been cancelled.

Ghosn added: “We are concerned about the segment but we are pushing ahead with additional Laguna models such as the estate (wagon) and coupe.”

He also said that Renault would have an electric car available in all markets by 2012.

Testing would start next year on a new vehicle built by Renault with battery technology from Alliance partner Nissan.

Ghosn added: “This will be launched in Israel in 2011 and available worldwide the following year.”

In the longer term Renault is also developing a fuel-cell, zero emission vehicle.

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