January 8, 2016 / 4:12 PM / 2 years ago

VW brand suffers first sales drop in 11 years, eyes tough markets

The logo of German carmaker Volkswagen is seen at a VW dealership in the Queens borough of New York, September 21, 2015.Shannon Stapleton

BERLIN (Reuters) - Volkswagen's core brand suffered its first fall in sales in more than a decade last year and the carmaker said that markets will remain "challenging" in 2016 as it battles to contain the damage from its emissions scandal.

Deliveries of VW-branded vehicles fell 4.8 percent to 5.82 million cars on weakening demand in China and the United States and the effects of the company's rigging of diesel emissions tests, the company said on Friday.

The underperformance at VW's largest division by sales and revenue pulled down annual group deliveries, including the Audi and Porsche premium brands, by 2 percent to 9.93 million cars, the first drop in 13 years, VW said.

"We must handle the situation on world markets where trends remain mixed," Chief Executive Matthias Mueller said.

Group sales in China, a stable source of revenue for VW for years and the carmaker's biggest market, fell 3.4 percent to 3.55 million autos while deliveries in Europe were up 2.5 percent to 3.95 million, the Wolfsburg-based firm said.

VW had briefly pulled ahead of global sales champion Toyota after six months, though slipped behind the Japanese rival in the second half of last year when the emissions scandal broke.

Toyota and U.S. rival General Motors are expected to publish full-year auto sales later this month.

Reporting by Andreas Cremer; Editing by Arno Schuetze and Elaine Hardcastle

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