The European Union (EU) agreed on Monday (1st December) that the continent's automakers must reduce emissions in new vehicles by 18 per cent within the next six years.

Under the terms of the deal, new cars will be required to emit no more than 130g/km, with manufacturers' fleets also being incorporated into the arrangements between 2012 and 2015.

The news seemingly brings to an end the long-running battle between EU lawmakers and automakers, who are concerned about declining demand and the cost of conforming to new emissions regulations.

Commenting on the announcement, Conservative representative Martin Callanan said: "This deal represents a balance between the needs of the environment and the car industry across Europe, which is suffering massively at the moment."

In addition, the deal will see automakers penalised by a fine of €95 for every gram per km for which a vehicle significantly misses the stated requirement, while those less than 3g over the limit will be hit with fines of €5-€25.

The EU has implemented a target of reducing emissions by around 40 per cent to 95g/km by 2020 in a move which is expected to boost sales of electric and hybrid vehicles.

Indeed, some European automakers have noted an increase in sales this year of their small, chic vehicles, despite the overall trend for declining sales within the industry, the Wall Street Journal reports.

Daimler AG reports that global sales of its Smart car rose by 47 per cent between January and October this year, while BMW AG posted an increase of 11 per cent for its Mini Cooper and Fiat claims to have sold 153,000 units of its new 500 model.

"These cars have enormous emotional appeal," commented John Lawson, a Citigroup automobile analyst in London.

"But as products, they also hit consumers' priorities on fuel economy and style on the head, so they are selling well."

Source:

UPDATE 2-EU agrees to cut car emissions in climate fight (01/12/08)
http://www.reuters.com/article/rbssConsumerGoodsAndRetailNews/idUSL171152720081201?sp=true

Small European Cars Shine (02/12/08)
http://online.wsj.com/article/SB122817265705770477.html?mod=googlenews_wsj