Oct 11 Reuters Volkswagen Group on Friday reported a 7 decline in thirdquarter global deliveries, showing how Europe39;s car industry is facing tough challenges, including weak demand from China and high production costs at home.

Europe39;s car companies also have to contend with the impact of a potential trade war between Beijing and the European Union as the EU presses ahead with import tariffs on Chinese electric vehicles, imposed over alleged subsidies.

VW, Europe39;s biggest automaker is undergoing a major revamp as it considers German plant closures for the first time due to weak European demand, competition from China, challenges presented by vehicle electrification, and high costs in Germany.

A better cost base, particularly in Germany, is essential to remain successful in this environment in the future, VW executive committee member Marco Schubert said in a statement.

Volkswagen39;s deliveries to China, the world39;s biggest car market, fell by 15 to 711,500 vehicles. This dragged down the global figure, which dropped to 2.176 million vehicles.

Rivals BMW and Mercedes said on Thursday that sluggish demand and stiff competition in China hit third quarter sales.

Schubert said the situation in China, where Volkswagen is being squeezed by local competitors offering cheaper electric models, was particularly intense.

VW has cut costs for fully electric vehicle production in China, a spokesperson for the group said in the statement, adding that the company will…