Tough Targets

In an interview with German tabloid Bild am Sonntag, Dimas said that he planned to introduce legislation next year that would require new cars to have average CO2 emissions of 120 grams per kilometer.

"The law must be obeyed," Dimas told the paper. "In the event that a company does not obey the requirements, there will be corresponding sanctions."

German carmakers are expected to be hit especially hard by the new regulation: Producers of luxury vehicles, such as Porsche, Daimler, BMW and Audi, far exceed the emissions target and lag behind when it comes to hybrid technology that's been pushed by companies such as Toyota and Honda.

Carmakers: Size does matter

In response to Stavros' comments, German carmakers are calling for varying emission targets according to the size of the car. This would mean that producers of smaller vehicles, which already have lower emissions, would have to cut them even further.

Otherwise, "producers of small cars can be gleeful because the premium segment will disappear from the market," Porsche CEO Wendelin Wiedeking told Handelsblatt newspaper, adding that it wasn't luxury cars, but the mass-produced smaller vehicles that were responsible for most of the CO2 emissions.

While Dimas said that his bill would take car size into consideration, he added that luxury car producers would still have to do their part.

"Just about every carmaker is now bringing out low-emission vehicles on the market -- and that is true for every segment," he said.

Merkel: Don't forget environment

German Chancellor Angela Merkel, who will open the IAA on Thursday, meanwhile also called on German carmakers to live up to their responsibility to cut carbon emissions.

"If the German car industry takes on the technological challenge, keeps up and improves quality and does not forget to protect the environment, Germany will not only have jobs for the future but will also be able to advance further its standing as an exporter," the chancellor said in her weekly video message.

The president of the German Association of the Automotive Industry, Matthias Wissmann, meanwhile told Welt am Sonntag newspaper said that the car sector had to "speed up" when it came to producing low-emission vehicles.