NEW YORK – Despite the fact Audi AG's global first-quarter deliveries were down 16% compared with year-ago, the German auto maker's head of worldwide sales and marketing can’t help hiding his glee that the company has vaulted ahead of BMW AG and Mercedes-Benz in European sales volume.

“For the first time in history, we overtook BMW and Mercedes in Europe,” says Peter Schwarzenbauer, a member of Audi’s board of management and former president of Porsche Cars of North America

The executive, who this month is celebrating his first anniversary as Audi’s global sales chief, says at the New York auto show here the auto maker’s first-quarter sales slid to 210,000 units, against a 25% decline in the worldwide market for high-value German cars.

Audi racked up 99,000 sales in Europe in the first quarter for a 21% decline vs. prior-year. But the competition fared worse: Overall sales for luxury German vehicles were down 29.5% in the U.K., 43.1% in Spain, 3.9% in France and 19% in Italy.

In the U.S., segment sales tumbled 33% compared with a 23% drop in Audi deliveries to 16,000 units, Audi says.

Schwarzenbauer forecasts the sector will see sales decline 15% this year.

“But we expect Audi (sales) will go down 10%,” he says.

A particularly bright spot for Audi is China. “In March, we sold 11,730 units in China, our best month ever there,” Schwarzenbauer says.

Audi sales also are up in some smaller markets, such as Australia, Mexico and Brazil.

Schwarzenbauer is bullish on Audi's future in the U.S. “We're discussing a new entry-level model for this market, as well as some new halo models.”

The new vehicle is not yet sold elsewhere. “But it's something that fits well into this market.”

On a global level, 43% of Audi's sales are gasoline-engine vehicles. The auto maker now is unveiling its first diesel models, including a diesel-version A3 to be offered later this year.

Schwarzenbauer says Audi could achieve 10%-15% of its sales from the U.S. market in five years. Audi management previously has stated it is targeting 200,000 U.S. sales by 2018.

Johan de Nysschen, Audi's U.S. president, has said he would rather sell fewer vehicles than push sales volume with incentives.

Schwarzenbauer backs up de Nysschen's approach, affirming that profit is more important than imposed sales quotas.

Premium group sales now account for 10% of the market. “We are predicting that it could grow to 15% by 2016,” Schwarzenbauer says. “If we keep our current 7.8% share in a 15 million unit total market, we would come to 150,000-160,000 units.”

The executive says the U.S. market could start seeing a rebound by the end of this year. “The rest of the world will follow in 2010,” he predicts.