By Helen Massy-Beresford

CLEON, FRANCE - Renault has limited scope for production cuts and will rely on a big sales push to help slash inventories in the face of a car market in crisis, a senior executive said on Tuesday.

"In order to really reduce our inventories we'll have to take action on the sales side," Renault's Executive Vice-President for Manufacturing and Logistics Michel Gornet said.

France's second-biggest carmaker and the number five by sales in Europe is, like its peers, battling with falling sales in its major markets as the effects of the credit crunch batter consumer confidence and spending.

Renault announced last week that it would temporarily halt production at sites in France, Spain and Romania as part of a bid to cut the build-up of unsold vehicles.

But speaking at an engine launch event at the group's Cleon factory in Normandy on Tuesday, Gornet added: "We'll soon be at a point where we won't be able to produce any less. I don't yet know how to do negative production."

Gornet said some factories - including its Curitiba facility in Brazil - will be closed for most of the month of December.

Renault's top management has slammed the brake on production to reduce stocks of unsold cars to the level of end 2007 and wants to avoid having to dump vehicles on the market at the expense of margins and second-hand values.

But the sales people are facing reluctant buyers amid worries about their future and some financing difficulties, while production people like Gornet want to keep the chimneys of the factories smoking.

The group revealed last week it would help dealers which are under heavy financial pressure. It has set up a marketing plan to help reduce their inventories, while in France, it has established a used vehicle promotion and will pay for the cost of new vehicles exchanged between dealers.

Renault had stocks worth around 6.5 billion euros (S$12.6 billion) at end-June and is targeting a level of around 5.9 billion - the same level as at end 2007 - for the end of 2008.

At 1530 GMT the Renault share price was up 0.03% at 17.960 euros having set a low of 17.155 earlier in the session.

(Editing by Marcel Michelson and Jon Loades-Carter)