PARIS, July 30 (Reuters) - Incoming Renault

CEO Francois Provost will take the helm of the French automaker

at a time when it is beginning to show cracks in its recent

success, revising down its full year profit forecast earlier

this month due to weaker sales volumes.

Below are some of the challenges ahead for Provost when he

takes over on Thursday.

TOUGHER COMPETITION

While Renault has been largely protected from U.S. tariffs

because it does not sell in the United States, it has been

indirectly hit by increased commercial pressure as European

competitors looking for new markets outside the U.S. step up

efforts to sell in the French firm's home region.

The company reported zero growth in second quarter sales

volumes, and warned of weak sales performance in June.

It is also facing rising competition from Chinese entrants,

both in electric vehicles and hybrids.

Analysts at Barclays say Renault may have seen slower

price-mix momentum in the first half of the year. The company is

scheduled to report full results for the first half on Thursday.

DEPENDENCY ON EUROPE AND CARS

With sluggish growth in Europe where Renault sells more than

70% of its cars, it needs to expand in emerging markets. It has

already outlined plans to invest 3 billion euros ($3.4 billion)

to launch eight new models under the Renault brand for

non-European markets by 2027.

It will also target developing less cyclical businesses

beyond autos, such as EV charging and financial services, as

part of a mid-term strategy which former CEO Luca de Meo had

aimed to unveil later this year.

TOO SMALL, LESS INDEPENDENT

Conscious that its small size does not allow it to fund the

development of electrified and autonomous vehicles, Renault has

set up numerous partnerships, including with China's Geely in

Korea and in combustion and hybrid engines around the world, and

with Volvo Group in electric vans.

However, this strategy has raised concerns among unions that

the company could lose its in-house know-how and its

independence. Renault, ranking only 15th in volumes globally, is

frequently the subject of rumours of a tie-up with larger peer

Stellantis ( STLA ).

Partnerships with Geely also have some worried about

potential leverage by China, though Renault's main shareholder,

the French state, says the tie-ups do not compromise the

company's ability to remain independent.

A HIGH PACE OF LAUNCHES

Under de Meo, Renault launched one of the biggest product

renewals in its history, with a record 10 launches and two

facelifts last year.

It is planning another seven launches and two facelifts in

2025, including of the Renault 4 and the Dacia Bigster, and

eight more in 2026, according to sources familiar with the

matter.

Key to increasing market share, new launches also require

significant investment in marketing and industrial fine-tuning

to deliver cars on time, at the right quality.

VAN WOES

A leader in Europe's high profit commercial vehicles market,

Renault's van sales plunged by 29% in the first half due to a

softer economy, and an overhaul of its models and product

offering.

GETTING BACK TO INVESTMENT GRADE

One of Renault's top priorities is to get its credit rating

back to investment grade to attract new investors, while also

boosting its market cap, currently only at 10 billion euros

versus Stellantis' ( STLA ) 23 billion euros.

Renault's debt is rated Ba1 by Moody's and BB+ by S&P

Global, one notch below investment grade.

NISSAN ( NSANF )

Since starting to rebalance its partnership with Nissan ( NSANF )

in early 2023, Renault has done three share sales, and

reduced its stake in its Japanese partner to 35.7% (17.05% held

directly and 18.66% via a trust).

It will need to find the right time to sell more, made more

challenging by Nissan's ( NSANF ) financial and operational difficulties.

It will also play a role in Nissan's ( NSANF ) overhaul, particularly

if the Japanese company decides to sign a strategic partnership

with another manufacturer. Renault opposed recent plans for a

tie-up with Honda ( HMC ) because it considered the financial terms were

not generous enough.

($1 = 0.8721 euros)

(Reporting by Gilles Guillaume; Editing by Dominique Patton and

Emelia Sithole-Matarise)