April 17 (Bloomberg) -- Volkswagen AG, Europe’s biggest carmaker, said first-quarter deliveries fell 11 percent on a decline in the U.S. and falling demand at the Audi luxury unit.

Volkswagen sold a total of 1.39 million cars, sport-utility vehicles and trucks compared with 1.57 million a year earlier, while deliveries of its namesake brand fell 4.8 percent, the Wolfsburg, Germany-based company said today in a statement.

Shrinking European and U.S. car markets have prompted Volkswagen and other automakers to scale back production and eliminate temporary jobs. With vehicle deliveries projected to drop 10 percent this year from 2008’s record of 6.23 million because of the recession, Volkswagen is bracing for a first- quarter loss.

The sales drop was held back by gains in countries where governments are offering incentives for car purchases, and the introduction of new models will allow Volkswagen to “perform significantly better than the competition in 2009,” Detlef Wittig, the company’s sales chief, said in the statement.

Declines in European car-industry sales, including deliveries by PSA Peugeot Citroen, the region’s second-biggest automaker, and Fiat SpA, Italy’s biggest, slowed to 9 percent in March, the smallest drop in six months, as incentives encouraged trade-ins, the European Automobile Manufacturers’ Association said yesterday.

Volkswagen-brand sales fell to 876,000 cars and SUVs, the company said today. Global deliveries at the Audi luxury division fell 11 percent in March to 90,400 vehicles, the unit said on April 6. Group figures also include the Skoda, Seat, Bentley, Bugatti, Lamborghini car divisions, the commercial- vehicles unit and, as of March, Scania AB trucks.

The company aims to sell 6.6 million Volkswagen-brand vehicles by 2018, up from 3.67 million last year. Government- backed incentives have spurred sales of Volkswagen’s Fox, Polo and Golf models in Europe, where the brand’s registrations gained 1.6 percent last month, according to industry figures.

To contact the reporters on this story: Andreas Cremer in Berlin at acremer@bloomberg.net.

Last Updated: April 17, 2009 07:46 EDT