Volkswagen AG’s (VLKAY - Snapshot Report) global sales dropped 2.2% year over year to 833,700 vehicles in Nov 2015 from 852,900 vehicles delivered in Nov 2014. This was owing to a significant decline in sales in the U.S., partially offset by improved performance in Western Europe and China.

Volkswagen’s U.S. sales fell 15.3% to 45,300 units in November, while sharp declines were recorded in Brazil and Russia due to economic woes. Meanwhile, deliveries in Western Europe rose 2.6% to 270,400 vehicles, while sales in China went up 5.5% to 329,000 units.

The core Volkswagen Passenger Cars brand’s sales dropped 2.4% to 496,100 vehicles in Nov 2015. During the first eleven months of the year, global sales went down 1.7% to nearly 9.1 million from 9.26 million vehicles sold last year. From January through November, the core Volkswagen Passenger Cars brand’s sales declined 4.5% to 5.34 million vehicles from 6.12 million cars delivered last year.

The German automaker is facing a challenging situation after the Environmental Protection Agency (“EPA”) revealed that it had developed a software algorithm to deceive U.S. emission tests. Volkswagen admitted that its diesel vehicles are installed with software which makes the engines appear to have low emission levels during tests. According to the EPA, Volkswagen vehicles emit nitrogen oxides, or NOx, at almost 40 times the standard amount. Nitrogen oxide emissions lead to smog, acid rain as well as serious health concerns like lung cancer.

Volkswagen’s software scam has not been confirmed in European emissions tests. However, the automaker will recall 8.5 million vehicles in Europe to correct the problem.

Zacks Rank

Volkswagen currently carries a Zacks Rank #3 (Hold). Better-ranked automobile stocks include General Motors Company (GM - Analyst Report), Fox Factory Holding Corp (FOXF - Snapshot Report) and O'Reilly Automotive Inc. (ORLY - Analyst Report). All these stocks carry a Zacks Rank #2 (Buy).