European production of cars, trucks and buses declined 17% to 15.2 million units last year, reports industry carmaker association ACEA.

Car production fell 13% to 13.9 million units compared to 2008 in spite of a 23% jump in fourth-quarter output to nearly 4 million units—the largest quarterly volume all year. Full-year production of light and heavy commercial vehicles plunged 42% to 1 million units and 64% to 245,600 units, respectively. Bus production dropped 12% to 35,100.

ACEA says Germany’s output of cars, trucks and buses fell almost 14% to 5.2 million units. Spain’s production shrank by about 15% to 2 million, and France’s output declined 20% to 1.1 million. Vehicle production in the U.K. plunged 34% to 1.1 million, and output in Italy declined nearly 18% to 843,000. Assemblies in the Czech Republic and Poland, eastern Europe’s two largest producers, increased 3% to 974,600 and 7% to 879,200 units, respectively.

Volkswagen AG sold a record 6.3 million vehicles last year. But a market shift to less profitable models caused revenue to drop 8% to €105 billion, and net income attributable to shareholders plummeted 80% to €960 million. Operating profits plunged 71% to €1.9 billion.

Results for VW’s car brands were mixed. Unit sales increased 8% for VW and 1% for Skoda last year. But they fell 5% for Audi, 39% for Bentley, 38% for Lamborghini and 9% for SEAT.

In the fourth quarter of 2009, VW’s group sales slipped 1.2% to €28 billion, and net income fell 73% to €257 million. Operating profit dropped 76% to €337 million.

VW predicts unspecified improvements in unit sales, revenue and operating income this year. The company aims to become the world’s largest automaker by 2018, with targeted annual sales of 10 million units. VW is spending heavily to meet that goal, acquiring Porsche AG and a 19.9% stake in Suzuki Motor Corp.

Yesterday VW said it may finance its acquisitions with a convertible bond issue, with an option to convert the bonds into 40 million preferred shares. The company did not indicate how much money it planned to raise, but media reports said it could be as much as €5 billion.

Russian automaker OAO AvtoVAZ plans to produce 1.2 million vehicles annually by 2020—up from a projected 400,000 units this year—and could launch a €320 million stock offering this year, reports Reuters.

Renault SA, which owns 25% of AvtoVAZ, will buy a portion of the stock, according to Reuters, which cites an unnamed source.

The partners said last year they will introduce five new models by 2012, two based on the Renault Logan, one supplied by Renault affiliate Nissan Motor Co. and two ultra-low-cost Lada cars.

Analysts are skeptical about AvtoVAZ’s ambitious plans. Last year the company was near bankruptcy and needed €1.2 billion in government aid to help pay its debts.

Laura Soave, formerly a marketing executive for Volkswagen AG, has been named head of the Fiat brand at Chrysler Group LLC. She will report to CEO Sergio Marchionne.

Laura Soave

Soave will oversee the U.S. debut of the Fiat 500 late this year and the reintroduction of the Fiat brand to the U.S. market. Soave also will have profit-and-loss responsibility for Fiat’s product portfolio in North America. Fiat SpA, which holds a 20% stake in Chrysler, exited the U.S. market in 1984.

At VW, Soave was general manager of experiential marketing, headed consumer marketing initiatives and was chief of advertising for large cars and SUVs.

Before joining VW, Soave worked at Ford Motor Co. to help the company reposition its domestic Ford, Lincoln and Mercury brands.

Chrysler is introducing the 500 as a competitor to the BMW Mini. The car, which will be produced in Chrysler’s assembly plant in Toluca, Mexico, debuts in December.

BMW AG reports its net income dropped 36% to €210 million last year as unit sales shrank 11% to 1.3 million units and revenue declined nearly 5% to about €51 billion.

But pretax profits rose 18% to €411 million, as the company cut its workforce nearly 4% to 96,200 employees. BMW also set sales records in China (+38%), Brazil (+119%) and India (+24%).

This year BMW expects a small increase in unit sales. CEO Norbert Reithofer, describing the company as “prudently optimistic” about 2010, says revenues will get a boost from China’s fast-growing market and the introduction this month of the redesigned 5 Series sedan.

Nissan Motor Co., citing a “steady restoration” of Russia’s market, says it will launch production of the Murano SUV at its St. Petersburg assembly plant in 2011.

The €136 million plant, which opened in 2009, currently makes the Teana midsize sedan and X-Trail compact crossover SUV. As production increases, Nissan will expand the plant’s staff from 850 to 1,450 employees. The plant can produce as many as 50,000 vehicles per year.

Audi AG tells Automobilwoche that its upcoming line of “e-tron” electric vehicles could account for 5% of sales by 2020.

The company also says it is likely to put its A1 e-tron extended-range EV concept into production in about three years. The coupe debuted last week at the Geneva auto show.

The A1 e-tron is propelled by a lithium-ion battery and an electric motor that generates 61 hp and 110 lb-ft of torque. The car also carries a generator powered by a small Wankel engine that extends the vehicle’s range by 200 km. Audi says the concept has a top speed of 130 kph.

The first e-tron model to enter production will be an electrified version of the R8 supercar in 2012. The car will be powered by lithium-ion batteries and four electric motors—one at each wheel—that generate a combined 313 hp. Audi says the car will be able to accelerate from zero to 100 kph in 4.8 seconds.

Strong fourth-quarter sales helped Pirelli & Co. SpA narrow its 2009 net loss to €23 million, compared with a €413 million loss the previous year.

Annual revenue fell 4% to €4.5 billion, but fourth-quarter revenue jumped 16% to €1.2 billion on the strength of improving tire sales in all major markets except Russia. Quarterly net income totaled €4.5 million, reversing a €296 million loss in the year-ago period.

Pirelli says it will sell off its non-tire operations, which include a real estate business and broadband division, in 2010 and 2011, respectively. It expects its revenue to improve by 6%-8% this year.

Pirelli predicts industry sales of replacement tires this year will increase 3% in the EU and North America and 5%-6% in emerging markets. The company expects the market for original-equipment tires to grow 20% in North America and expand by 5%-6% in emerging markets but remain unchanged in Europe.

Volkswagen AG’s Skoda unit will increase second-quarter production of the Roomster MPV, Yeti mini SUV and Superb large sedan by unspecified amounts, reports Reuters.

Skoda cut production of the Roomster through the first quarter of 2010 because the end of scrappage incentives in Germany reduced demand. The company announced previously that it would cut production of its Octavia compact hatchback by 23% in 2010.

Last year, Skoda sales grew 1.4% to a record 684,200 vehicles, aided by the brand’s expansion into China and the effect of scrappage schemes that boosted demand for low-price cars in western Europe.

Hyundai i40 Gets “Intelligent” Grille

Hyundai Motor Co.’s i-flow, a large sedan concept showcased at the Geneva auto show, is a test bed for a variety of technologies that will gradually find their way into the upcoming D-segment i40 sedan, Autocar reports.

The i-flow concept features an “intelligent” grille that dynamically controls engine cooling. The car also is fitted with solar panels on the roof and a thermoelectric generator that uses heat produced by the catalytic converter to power accessories.

The i-flow is powered by Hyundai’s first diesel-hybrid powertrain, a turbocharged 1.7-liter engine mated to an electric motor, lithium-ion-polymer battery and six-speed transmission. The powerplant is insulated to help cut the higher fuel consumption typical when starting a cold engine. Hyundai says the feature can maintain an engine temperature of 40°C overnight.

A conventionally powered version of the i40 debuts in Europe this year. A hybrid-powered version is due in 2011.

AMG Unveils Turbo V-8 Engine

AMG has developed a new 5.5-liter V-8 engine for the Mercedes-Benz S63 sports sedan that is more powerful than its 6.3-liter predecessor but also is 25% more fuel efficient. The engine, code named M157, will debut this summer.

If equipped with AMG’s performance package, the direct-injection twin-turbocharged engine generates as much as 571 hp and 663 lb-ft of torque. Yet fuel consumption is only 10.5 liters/100 km compared to 14 liters/100 km for its predecessor.

Low-Emission Cars Claimed 25% of European Sales Last Year

Western European sales of cars that emit fewer than 120 g/km of carbon dioxide jumped to 3.2 million units, or 25% of total car sales, last year, according to the industry association ACEA. The proportion compares to 16% in 2008, 11% in 2007 and 9% in 2006.

ACEA attributes last year’s surge to government scrappage plans that boosted demand for more fuel-efficient cars. The association says A- and B-segment cars accounted for 45% of total market sales in 2009, up 10 percentage points from the previous year.

The average vehicle sold in western Europe had a 1.6-liter engine, the smallest average displacement in western Europe since 1991.

Lawsuit Asks EC to Release Climate Data on Biofuels

Several European environmental groups have filed a lawsuit demanding that the European Commission release data about the negative impact of biofuels on climate change.

The groups have been trying since October to gain access to information they say may show that converting forests to cropland needed to grow biofuel materials will produce significant emissions of greenhouse gases. The EU has ruled that member states must use renewable sources—mostly biofuel—to supply at least 10% of their transportation fuel requirements by 2020.

The environmental groups say they want to determine whether using biofuels will actually reduce greenhouse gas emissions as intended.