The European Union Commission's top industrial regulator on Thursday announced a plan to reduce red tape on the European car industry, but said he would not call into question rolling back plans to end the car makers' antitrust exemption.

According to Dow Jones Newswires, commissioner Guenter Verheugen said a working group called CARS 21 was being created to look for ways of achieving this goal. It reportedly will include representatives from car companies, trade unions, environmentalists and consumer groups, as well as top politicians such as German economics minister Wolfgang Clement and Italian transport minister Pietro Lunardi.

"Europe has a strong auto industry - but the situation was far from being rosy," Verheugen told Dow Jones at a press conference. He reportedly highlighted that labour productivity was a quarter lower than in the US and 30% lower than in Japan, while labour costs were over 10% higher than in Japan and almost three times as high as in South Korea.

"I would like CARS 21 to develop concrete, brave and innovative ideas and recommendations on how we can win pole-position in the global car race," Verheugen said, according to Dow Jones.

The group reportedly will hold its first meeting in March and then two or three other meetings this year and submit proposals by the end of the year. Verheugen said he already had decided to propose eliminating separate EU rules on how to classify vehicles, adopting instead UN regulations.

"For industry, this means it can concentrate on one set of technical requirements," Verheugen told the news agency.

Joining Verheugen, a German, at a news conference Thursday to announce the initiative was Volkswagen chairman Bernd Pischetsrieder, Dow Jones said. He reportedly praised the initiative as a way of eliminating "misunderstandings" between the EU executive and carmakers.

"If we don't make our industry more competitive in costs, it is hard to see in 50 years time Europe having much of a car industry left," Pischetsrieder told Dow Jones, adding: "We have to reverse the trend - that's the issue."

Dow Jones said both Verheugen and Pischetsrieder said the new group would not reverse tough new antitrust legislation. In 2002, then-EU competition commissioner Mario Monti pushed through rules to allow car dealers to sell different brands, a change that flew in the face of manufacturers' exclusive arrangements with dealers.

More recently, the news agency noted, auto makers have criticised a proposed new pedestrian-safety rule that they say will force costly redesigns. Also pending before the commission is a proposal to open auto makers' high-margin auto-parts manufacturing businesses to competition. The European Automobile Manufacturers Association oppose the move, arguing that parts designs are intellectual property and that allowing other companies to copy them will reduce safety.

"We will not question existing competition rules," Verheugen reportedly insisted. He said the goal of the antitrust rules was to reduce car prices and added, "I would like to see consumer prices go down."

In response, the VW chief told Dow Jones manufacturers "will never support proposals from the commission that do not the pass the competitiveness test."