Renault has reported better-than-expected 2012 operating profit and eliminated debt in its automotive division after balking at steep discounts to limit money losing sales.

According to Bloomberg, earnings before interest, taxes and one-time items fell to €729 million (£629m) from 1.09 billion a year earlier for an operating margin of 1.8 per cent, the company said today.

"In the difficult environment in Europe, and especially France, the group led a rigorous sales policy," CEO Carlos Ghosn said in a statement. "The Renault group is pursuing its strategy of global growth while strengthening its financial situation."

Renault's automotive division suffered a €25m loss in 2012 compared with a profit of €330m a year earlier after the automaker shed market share in Europe last year to push growth in Latin America and Russia.

Sales in company's domestic market fell 19 per cent, the biggest drop in Europe and outpacing the market's 7.8 per cent fall.

Renault today predicted that car sales in Europe will fall at least three per cent this year for the sixth straight annual decline.

Backed by the revamped Clio and budget Dacia Logan, the manufacturer forecasts that its global deliveries will rise this year after falling 6.3 per cent to 2.55m cars in 2012 when gains in emerging markets partially offset the slump in Europe.

Renault is also trying to broaden its product range by reviving the Alpine sports car label and developing the Initiale Paris insignia into a full-fledged luxury brand. The upscale cars would flank the mass-market Renault marque and the budget Dacia nameplate.