FRANKFURT -- German automakers will offer software updates that will reduce diesel emissions from Euro 5 and Euro 6 diesel cars by at least 25 percent on average, the VDA industry association said.
The offer will be made Wednesday at a summit of politicians and car executives called to discuss ways to reduce inner-city pollution that is being blamed mainly on diesel fumes.
In a statement, the VDA said on Tuesday the software updates for engine control systems will quickly and effectively reduce NOx emissions.
VDA President Matthias Wissmann said diesels are enormously important to the German economy's success and to help combat climate change because they emit about 15 percent less CO2 than comparable gasoline cars.
In the first six months, diesels amounted to 41.3 percent of Germany’s new-car market versus 46.9 percent in the same period last year. Declining demand for diesels has put Germany on track to post its first rise in CO2 from its new-car fleet since EU policymakers began regulating tailpipe pollution in the late 1990s.
The German government will accept the software updates for about 2 million vehicles, industry and government sources said on Tuesday.
The deal suggests the German auto industry has headed off demands for hardware upgrades that would cut more pollution but would also be much more expensive, with the potential costs as high as 10 billion euros.
BMW, Daimler and Volkswagen Group have been under intense pressure in their home market to reduce high NOx emissions, which are linked to respiratory diseases.
Foreign automakers selling diesel cars in Germany have not yet agreed to offer software updates because their association, the VDIK, has not yet reached a consensus.
The deal also foresees a range of other measures to reduce emissions, the sources said, such as subsidies for electric buses, taxis and other municipal vehicles, as well as a commitment to increase the number of charging stations.
The auto sector and the government will each contribute half to a 500 million euro fund aimed at helping local governments reduce NOx emissions.
The compromise might not cut emissions enough to stop bans of diesel cars in German cities, such as a ban planned in Stuttgart and confirmed by a regional court last week.
DUH, the environmental lobby group, which brought the Stuttgart case, has said it wants moves to go beyond voluntary software updates or it will take further legal action.
Inner city pollution is a sensitive issue in Germany ahead of national elections next month. Chancellor Angela Merkel's conservatives have come under fire from consumer and environmental groups as well as opposition lawmakers for their close links to carmakers, especially since Volkswagen admitted to cheating emissions tests in 2015.
"The car industry can always rely on the support of the government when things get difficult," said Timo Lange, a campaigner with LobbyControl, a non-profit group.
Transport Minister Alexander Dobrindt rejected suggestions on Tuesday that he is too closely tied to car companies. "I am no crony of the auto industry," Dobrindt told ZDF television in an interview, adding that there was a "partnership" between business, politics and society.
The Environment Ministry has said software improvements can only be a first step to reduce pollution.
Environment Minister Barbara Hendricks, a member of the center-left Social Democrats, demanded a shake-up of the KBA, Germany's vehicle certification authority, after reports it has played down emissions transgressions.
"I am calling for a divided control of certification and emissions testing on the streets. That should be done by two different authorities," Hendricks told the Nordwest-Zeitung newspaper.
Dobrindt rejected that idea and also defended the KBA, which is controlled by his ministry, saying the fact that 2.5 million VW cars had been recalled over its emissions scandal showed he was serious about tackling the problem.
He repeated that he is opposed to plans like those announced by Britain and France to ban the sale of new gasoline and diesel cars by 2040. Germany's environmental Greens are calling for a ban even earlier - from 2030.
"I can't understand these simplistic messages," he said, adding that politicians should not decide on technology of the future, but that should it should be up to business to be innovative.
The government wants automakers to finance their own schemes to encourage drivers to switch to newer, cleaner models, an implicit rejection of calls by some politicians for state subsidies.
The German auto industry's sense of crisis deepened when Der Spiegel magazine reported last week that VW, Daimler, BMW, Audi and Porsche colluded for decades on prices, technologies and the choice of suppliers to the detriment of foreign rivals.
Reuters contributed to this report