(Reuters) - Volkswagen Group reported a 7% decline in third-quarter global deliveries on Friday, showing the extent of challenges faced by the European auto sector.

Europe's top automaker is undergoing a major revamp as it considers German plant closures for the first time due to weak European demand, competition from China, challenges presented by vehicle electrification, and high production costs in Germany.

"A better cost base, particularly in Germany, is essential to remain successful in this environment in the future," executive committee member Marco Schubert said in a statement.

Volkswagen's deliveries to China, the world's biggest car market, fell by 15% to 711,500 units, joining its premium segment peers BMW and Mercedes.

This dragged down the global figure, which dropped to 2.176 million vehicles.

Deliveries of fully battery electric vehicles (BEV) were down 9.8% at 189,400 units in the July-September period.

The automaker cut its guidance twice in less than three months and expects to deliver around 9 million cars this year, representing an annual decline.