The new Euro 5 and 6 regulation is a compromise reached between the European parliament and EU governments, but also with European manufacturers, Global Insight automotive analyst, Thomas Ryard said in a research note published on Thursday afternoon.

"The fact that the draft proposal will be ratified when Germany holds the EU presidency could have added pressure on regulators to make compromises or see their regulations simply rejected," Ryard suggested.

"Any effort to impose too radical rules on the auto industry is always likely to meet with opposition from western European governments, particularly the German administration, which is traditionally very supportive of its domestic manufacturers."

He noted that a report produced by the European Federation for Transport and Environment had earlier found that around three-quarters of automakers are failing to meet the European Automobile Manufacturers Association's (ACEA) voluntary targets for carbon dioxide (CO2) emission reductions to an average of 140 grams per kilometre (g/km) per car by 2008.

According to the report German and Japanese carmakers are the most at fault when it comes to improving fuel efficiency to meet present European targets to cut CO2 emissions. In addition, German carmakers are still lagging behind French and Italian competitors in the area of DPF fitment.

"By voting in favour of revising the deadline for the introduction of Euro 5, the EU parliament environment committee has bowed to pressure from car manufacturers, which already wielded their influence by securing lower than expected limits on PM emissions for diesel vehicles," Ryard said.

"Under the compromise deal, Euro 5 standards would start to apply a year later than originally proposed by the EC, and full compliance will only become compulsory as of January 2011.

"In addition, the deal failed to close a loophole by allowing heavily polluting sports-utility vehicles (SUVs) to be included in the LCV category and therefore benefit from a one-year delay in complying with the new emission rules.

"Under the EC's proposal, SUVs over 2.5 tonnes would have been subject to the same limits as all other cars for the first time. However, the EU parliament agreed to maintain the exemption for SUVs and instead abolish it only as Euro 6 standards are introduced, meaning that SUVs will not be obliged to comply with the new standards until 2012."

EU eyes CO2 limits