The European car industry has warned that new car prices may rise by €4,000 as a result of the new proposals by the EU Commission to reduce carbon dioxide emissions.
Figures released by the European Automobile Manufacturers Association suggest that prices may rise by up to €3,650 per vehicle to achieve the commission's targets.
However, there was some relief among manufacturers that the proposed 130g/km average emission level for new cars by 2012 would not apply to each individual manufacturer, but to the industry as a whole.
That will allow the manufacturers of larger-engined cars - particularly the German premium brands like BMW, Mercedes and Porsche - to continue to produce vehicles above the limit so long as the average emissions from new cars across Europe do not exceed 130g/km.
Irish industry reaction was muted, with most distributors saying it is too early to say exactly what impact the proposals will have on Irish prices.
According to Alan Nolan of the Society of the Irish Motor Industry (SIMI), while the exact cost implications for Irish motorists are unclear as yet, undoubtedly the targets will have a significant impact on the cost of vehicles.
"We will need to study the detail carefully, though, and we believe it will be important to focus efforts on changing consumer behaviour as well as imposing regulations on manufacturers. The car industry has already worked hard to reduce emission levels and the number of vehicles that meet the standard already has significantly increased," he said.
However, despite the decision to apply an industry average, it is likely manufacturers will struggle to meet the limits. Many cars currently are well beyond the 130g limit.
A Ford Mondeo 1.8-litre car with a Duratec petrol engine rates at 184g. A Fiat Punto with a 1.2-litre petrol engine produces 136g, a 1.2-litre petrol Skoda Fabia produces 144g, while a 1.4-litre petrol VW Golf produces 166g.
One estimate puts the number of cars currently being sold in Europe that are capable of meeting the new emission rules at less than 5 per cent.
One consequence of the new rules may be an increase in the number of small cars produced by European manufacturers. These can then be used to balance out larger cars in their model range.
Recently Toyota, Peugeot and Citroen came together to produce a range of one-litre super-minis with emission levels of 109g/km. In Toyota's case, this model can be used to balance out other models such as its flagship Lexus 460, with a 4.6-litre engine and emissions of 261g/km.
The EU Commission move comes as the Government prepares to introduce a new taxation system on new cars next year that is likely to take account of CO2 emission levels.
Alan Nolan of the SIMI said any new taxation based on emissions levels should not only punish heavy polluters but reward those who adhere to the limits. "There must be a carrot as well as a stick", he said.