An all-new third generation Clio was unveiled in 2005. It uses a platform co-developed with Nissan (which Renault has a share in) that is shared with the Renault Modus and the current Nissan Micra. It is considerably larger and 130 kg heavier as well as more expensive than the Clio II, the result of a decision to move the Clio slightly upmarket. The outgoing Clio II will continue to be sold as a budget option until the launch of the new Renault Twingo (expected 2007). The new Clio achieved a 5-star EuroNCAP safety rating, joining the rest of Renault's family of top-rated consumer motors - with the exception of the Kangoo - which all have the maximum safety rating. Sales of the 3-door model begun throughout Europe in October 2005, with a 5-door model to follow in early 2006.

In June 2006 the sales of the third generation Clio Renault Sport started in France for the price of 23000 euros. Clio Renault Sport is equipped with a new naturally aspirated 16-valve 2 liter engine based on the earlier version used in the second generation Clio Renault Sport and a 6-speed gearbox. The engine develops 145 kW (197 hp) at 7250 rpm. The top speed is 215 km/h and 0-100 km/h takes 6.9 seconds.

Renault exhibited a Hi-Flex Clio with a 1.6 L 16-valve engine at the 2006 Paris International Agricultural Show. This vehicle, which addresses the Brazilian market, features Renault-developed flex-fuel technology, with a highly versatile engine that can run on fuel containing a blend of gasoline and ethanol in any proportion (0% to 100% of either)

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