Audi has become the top premium brand in the European market, according to Auto Motor und Sport, selling 45,124 vehicles last year. This is no small achievement, as competition among Germany’s premium brands is fierce. Mercedes was the second best-selling premium brand in the market with 39,748 sales and BMW fell to third with 36,832 units sold. Only a year ago, Audi was in 3rd place with 3.9 percent of the market; now it boasts 5.1 percent. In the same period, BMW and Merc market share dropped by less than half of one percent. Audi marketing maven Peter Schwarzenbauer credits Audi’s young vehicle lineup, telling AM und S that new models like the A4 Allroad (above) would keep sales momentum moving.

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No prizes for guessing “not so much.” But with its product line dead in the water, Chrysler desperately needs to generate some kind of enthusiasm for its continued existence. And at this point, the promise of what Auto Motor und Sport call “retro-flitzers” like the Fiat 500 and 500 C shown above is the only shot they have. And sure enough, Automotive News [sub] reports that Fiat may export European-built cars in order to speed up the timeline for integration with Chrysler. “We are currently working on a plan to begin shipping the Fiat 500 minicar and the Alfa Romeo 940 [entry-premium car] to the U.S. in about a year,” says the anonymous source. who These cars would be sold at “some” Chrysler-Dodge-Jeep dealers in advance of production of the 500 at Toluca, Mexico and the 940 at an undisclosed American plant. Which means taxpayers will be funding a premium captive-import-led “turnaround.” Oh boy. Meanwhile, Fiat is considering building its production purgatory-bound 169 upper-premium sedan on Chrysler’s LX platform. I can see the “Italian Engineering” ads now.

The  “barn find” of a 1937 Bugatti Type 57S Atalante, that was thought to fetch $8.7m, finally went under the hammer at Bonham’s in Paris. According to the BBC, “it eventually sold for 3,417,500 euros.” At today’s rate, that’s $4.4m . . . about half.  Even barn finds don’t keep their residual value as much as they used to.

While Honda preps a beefed-up, AWD Venza-alike for the US market, this is the Accord Wagon that Europeans get to look forward to. The Type S comes with a 2.2 liter turbodiesel that makes 180 hp and pulls 280 factotums of torque [Ed. ha ha] at 2k RPM. Not your typical Honda screamer, eh? Anyway, while Europe yawns at the coming of the Acura brand and the US version of the Euro Accord gets the dismal reception it deserves, Honda seems set on playing me-too with a crossoverized version of the Accord wagon. To which I say fiddlesticks. Even if a diesel isn’t in the cards for the US, just bring us this freaking wagon. Have you seen Acura’s CUV sales?

The financial crisis will (this is an easy prediction to make) have a strange effect on some car brands (see Honda). A few car makers will try to move upwards towards Panameran profitability, while others will try to be anything to anybody as long as that somebody is a buyer. A few brands will steer themselves downwards in a more or less desperate grab at recession-resistance sales. And it seems that Subaru is one of them. If you think the Subaru brand means “sporty, 4WD, boxer-engined, super-reliable”, then you’re in for a surprise. If European Subarus are indicative of worldwide strategy, then two out of four of those are goners. The new Impreza 1.5 RF (Revolution Frontwheel, not a deliberate jab at Robert Farago’s loathing for brand dilution), is weak (107 HP), slow (0-60 in 13.2 sec), and FWD. It has only disc brakes in the front and lists for 16.5K € in Germany, which will probably amount to around 11K net after rebates. So it’s cheap and dull. Will people buy it?

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Automotive News [sub] reports that Fiat CEO Sergio Marchionne is angling for a special Italian-edition auto bailout, echoing a FIM-CISL union official who earlier argued that 60k Italian auto jobs are “at risk.” The playbook should sound familiar. “We expect help from the government for the entire car sector,” Marchionne said. “It’s not about helping Fiat but restarting an entire sector and the whole economy.” This coming from a firm which will likely take a 35 percent stake in Chrysler… if the US government comes through with enough bailout funds to make it worthwhile. Not that double-dipping is in any way unheard of, as bailout mania hits the global automakers. Italian PM Silvio Berlusconi has already met with EU Industry Commish Gunter Verheugen in Turin, Fiat’s hometown. Verheugen had earlier warned that not all European automakers may survive the current auto sector crisis.

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One of the myriad unintended consequences of America’s bailout bonanza is the prospect of an international trade war. Though the WTO moves slowly, the European Union often takes a firm line on American subsidy regimes. And a report in Automotive News Europe [sub] indicates that the EU is prepared to take a firm line on automotive subsidies, as it has in the past with steel and agricultural protective measures. “Europe cannot just look on if someone offers subsidies and market forces are dispensed with,” declares German Chancellor Angela Merkel. “We have to watch carefully what the new president of the United States … will do with the American automotive industry,” growls EU Industry Commissioner Guenter Verheugen. But what’s this? Auto Motor und Sport reports the details of France’s latest 300m Euro effort to rescue the Renault and PSA Peugeot Citroen’s supply chains.

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Automotive News [sub] reports that GM is preparing to spin off its Saab brand, since its “strategic review” has failed to turn up any interested buyers. “Saab has been negotiating with GM and the Swedish government about becoming a more independent company, initially as part of GM,” explains a mysterious GM source. According to Saab’s union president Paul Akerlund, “under this [plan], the Saab board will be more like a normal board, and less dependent on what happens on GM’s European strategy board. They will make their own decisions.” Still confused? GM will still be the owner, but Saab will have its own budget,  says Akerlund. Presumably only long enough to attract an interested buyer, though. “You have to make sure there is a company that GM can sell,” says Stefan Lofven, president of Sweden’s IF Metall union. “That means a company that is a separate entity where people can look at the balance sheets and you know what you are buying.” As in not GM, where top executives are “losing patience” with Saab. So instead of “GM life support” as Lutz so uniquely puts it, Saab gets production of the new 9-5 and an undetermined amount of cash (ha!) to retreat to the motherland and court buyers in peace.

Europe has an abundance of car makers. Apparently, Brussels is preparing the populace for less. As EU business ministers gathered in Brussels to discuss support for the flagging industry, as French manufacturers lobby their government for aid, European Union industry commissioner Guenter Verheugen said some European carmakers face an uncertain future.

“There is no guarantee that all the main European manufacturers can survive the crisis,” Verheugen told BBC radio. Translation: don’t bank on a bail-out. If you get in trouble, you’re on your own. There’s surely BIG trouble ahead; Verheugen forecasts a further 20 percent drop in sales in 2009. He said the industry’s outlook was “to say the least, brutal,” as cash-strapped consumers defer big-ticket purchases.

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Europe’s industry association ACEA finally got around to counting 2008 car sales, and there are good news and bad news. The good news is that the news from Europe aren’t half as bad as the news from the U.S. The bad news is that European new passenger car sales fell 7.8 percent in 2008, their sharpest fall for 15 years, Reuters reports.

Like in America, the sharpest drops occurred in the last quarter of 2008, with a 19.3 percent fall in new passenger car registrations compared with the year earlier period. In December car sales fell 17.8 percent year on year across the European region (which includes the 27 EU member states as well as the European Free Trade Association countries, but excludes Cyprus and Malta.) December was the second worst month of the year for the region, as after a 25.8 percent year-on-year fall recorded in November. Like in the U.S. the Q4 numbers don’t augur well for a happy 2009.

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Autocar is so certain that Audi will whip up an “S”-badged version of its forthcoming A1 city car, they’re touting specs and renderings of a car that will make hot hatch lovers weak in the knees. The S1 will compete with such miniscule forces of nature as the JCW Mini and Alfa MiTo by offering 200hp, 300nm and AWD. In a package that makes the GTI look like a lumbering beast. A tuned version of the turbo- and super-charged 1.4 TFSI engine that is drawing rave reviews from European buff-books will hook up to a seven speed dual-clutch box, sending 60 percent of the power to the rear wheels. Zero to 60 should come in six seconds, reckons Autocar, while the top speed will be limited at 155 mph. And fuel consumption should stay around the 30 mpg (US) range. Throw in lowered and magnetically-damped suspension, 19 inch wheels, S-line visual cues and a possible cell phone integration option (ala KEI), and Autocar’s verdict that the S1 will be a “technological tour de force” is hard to argue with. Of course this means the price of admission is steep. $36k (25k Pounds Sterling) is a brutal entry point for a hot hatch, even if it packs more technology than an F-16. And then there’s the question of whether it will be sold in the US. Or at all, given the state of the economy. On paper though, the S1 is a near apotheosis of the hot-hatch form. I’ll take two.

Jaguar XF Diesel S – 3.0 V6 with 271 hp, 442 lb/ft of torque. Will do 0-60 in 5.9, rated at 35 MPG (US) average. A 236 hp version of the same 3.0 liter engine will be available.

Not for North America. (Consolation prize: we will get the 5.0 liter Supercharged gasoline V8 with 503 hp next year). Full embargo-broken press release after the jump.

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These are the stock wheels on two special edition “green” Volvos in Europe. What do you think of ye olde Swedish rims?