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% 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.

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% 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% to 3.55 million cars, while deliveries in Europe were up 2.5% 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 US rival General Motors are expected to publish full-year auto sales later this month.