A German court has ruled that cities can impose driving bans on diesel cars to combat air pollution, a decision that could affect millions of drivers and the country's powerful motor industry.
The Federal Administrative Court in Leipzig rejected an appeal brought by two German states against lower court decisions that suggested driving bans for particularly dirty diesel cars would be effective and should be considered.
Environmental campaigners had sued dozens of German cities, arguing that they have a duty to cut excessive air pollution to protect people's health. Diesel cars emit nitrogen oxide, or NOx, which causes respiratory illnesses and thousands of premature deaths annually.
Officials warned it would be an administrative nightmare to enforce bans only on certain vehicles.
Judges said the two cities at the centre of the case -- Stuttgart and Dusseldorf -- can include diesel bans in their clean air plans, but have to ensure that any measures are proportionate to the goal of reducing emissions to the legal limit.
The ruling also foresees transition periods for the introduction of diesel bans. German news agency dpa reported that any ban in Stuttgart, the home of car maker Daimler, would not come into force until September 1 at the earliest.
In a blow to car owners, presiding judge Andreas Korbmacher said cities will not be required to compensate drivers for being unable to use their diesel vehicles.
The value of diesel vehicles already took a severe hit when car maker Volkswagen was found three years ago to have used in-car software to cheat on US diesel emissions tests. The discovery resulted in large fines and costly buybacks for Volkswagen in the United States.
The German government has refrained from making car makers pay for selling cars with higher-than-advertised emissions. But in a bid to avert driving bans, the government recently proposed several measures to reduce harmful emissions that included subsidising public transport and physically upgrading millions of vehicles.
One of Germany's oldest and largest environmental organisations applauded the decision, saying "the pressure on politicians and manufacturers has increased significantly" to take measures to reduce pollution.
The Nature and Biodiversity Conservation Union said "affected cities must now be made the trailblazers of a transportation U-turn as soon as possible to strike a balance between mobility needs and environmental and health protection".
The agency, known in Germany as NABU, said the verdict also illustrates the failure of the federal government to bring air quality in line with EU regulations and avert driving bans.
It is urging the incoming government to focus on reducing nitrogen oxide emissions in cities through stricter controls, with affected vehicles retrofitted with filters at manufacturers' expense.
Shares in German car firms are moderately down in the wake of the court decision.
Daimler AG was down 0.7% at 69.77 euro (£61.38) and BMW AG was down 0.7% at 87.14 euro (£76.67), while Volkswagen AG fell 1.8% to 162.54 euro (£143).
Car shares eased lower amid generally falling shares.