Speaking at the Detroit Motor Show, VW chief executive Martin Winterkorn told the publication of the gravity of the situation in the European car market and added that the industry is currently seeing over-capacity of some three million plus vehicles per year.

However, he added to the FT: ‘What other competitors are doing with this excess capacity, I don’t know. I can only tell you that we are not reducing capacity at the moment. We’re not cutting back.’

The interview follows the publication last week of figures by LMC Automotive showing an 8.2% drop in West European car sales in 2012.

Last week, Honda announced that it is make 800 redundancies at its plant in Swindon in the UK in response to the slump in the European new car market.

However, figures released today by the Volkswagen Group show that 2012 was its best-ever sales year, with global deliveries of 9.07 million vehicles, up by 11.2%.

Deliveries within Europe remained stable at 3.67 million vehicles, down 0.3%, but the decline was more pronounced in Western Europe, with the figure of 1.85 million vehicles down by 6.5%. Central and Eastern Europe in contrast were up 17.6% to 644,300 vehicles, of which 317,700 were delivered in Russia, up by 38.8%.

North American deliveries were up 26.2% to 841,500 units, of which 596,100 were delivered in the United States, up by 34.2%

Mr Winterkorn said: ‘The United States is one of the Volkswagen Group’s key markets for implementing our Strategy 2018. Volkswagen Group of America will continue to grow and, together with Porsche Cars North America, will deliver well in excess of 600,000 vehicles to customers this year.’

Deliveries were also up by 8.2% in South America to 1.01 million vehicles, of which 780,200 were delivered in Brazil – an increase of 10.7%.

A notable performance was also seen in the Asia-Pacific region, where deliveries topped the three million mark for the first time in a twelve-month period.

A total of 3.17 million vehicles were handed over to customers – up by 23.3% – of which 2.81 million units were delivered in China, representing an increase of 24.5%. In India, deliveries increased by 2.1% to 114,100 units.

Mr Winterkorn added: ‘The Volkswagen Group developed extremely well in difficult conditions. 2012 was the best sales year ever. This is another big step forward in our Strategy 2018. Tough challenges lie ahead. The Volkswagen Group has everything it takes to face these challenges and to play a leading role on world markets.’