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Carmakers are moving to pre-empt 2012 European Commission plans to introduce legislation that cuts average European fleet exhaust emissions of CO2 to 130g/km for new cars from about 160 now.
They are also working on technology to beat the EC to the punch in 2020, when a CO2 limit of 90g/km is likely to be imposed. The planned restrictions are part of European Union efforts to fight climate change.
European environmentalists want tougher limits - 120g/km in 2012 and 80g/km in 2020.
"Climate change is a long-term challenge and the car industry also needs a long-term outlook," said Jos Dings, director of environmental group the European Federation for Transport and Environment. "An 80g target by 2020 would ensure that we double fuel efficiency within a decade."
But the European Automobile Manufacturers Association (ACEA), a lobby group, said the 130g/km figure was not the most cost-effective way to curb climate change.
"We're very committed to fighting global warming together with every other participant," said spokeswoman Sigrid de Vries. "But putting the burden mainly on the car industry is too costly and not cost-effective, and it will lead toward loss of jobs and manufacturing in Europe."
Nevertheless, the carmakers the ACEA represents, including DaimlerChrysler, BMW, Porsche, Fiat and Renault, are introducing combustion engine technology designed to at least meet planned exhaust emission limits.
European carmakers are expected to miss a voluntary goal to reduce the average carbon dioxide output from new cars to 140g/km by next year, a fact that has given weight to arguments for binding legislation.
Asian carmakers have until 2009 to meet the voluntary target. Japan's Honda is the leader here. The 2012 target, however, will almost certainly be compulsory and apply to all cars sold within the 27-nation EU bloc, including those made in the United States.
The new technology includes carbon dioxide-reducing stop-start systems. In Europe, Citroen is using it on the C3 hatchback and BMW on its 1-Series. Mercedes-Benz will launch stop-start across its entire European line-up, beginning with the A- and B-class cars in about six weeks.
The chairman of giant automotive supplier Bosch, Dr Bernd Bohr, says one out of every five cars will use stop-start systems by 2012. Bosch developed the system used by BMW. Not only does it save fuel but it also reduces CO2 emissions by up to 8 per cent.
Electric stop-start systems work by shutting the engine off when the car is stopped and then starting it up when the accelerator is pressed or the brake is released.
It is similar in operation here to petrol/electric hybrids the Toyota Prius and Honda Civic but without the battery packs. Like hybrids, the main goal of stop-start is to reduce CO2 emissions.
Mercedes-Benz is expected to use the Integrated Starter Generator system developed by US electronics company Delphi.
The A- and B-class cars will get a belt-driven unit and the larger, rear-drive models a flywheel-driven in-line device that functions as both starter and generator. Such a system, says Mercedes-Benz, can also reduce engine vibration and provide fill-in torque to smooth out gearshifts.
The belt-driven system is shaped like an alternator. It replaces the starter motor and alternator, providing an instant stop-start function for fuel savings of up to 8 per cent.
Various refinements of the belt-driven device can boost economy further - such as brake energy regeneration and mild engine boost.
More expensive in-line units are mounted directly on the crankshaft between the engine and gearbox. They offer more power, while also providing regenerative power from braking and engine boost under heavy load. Tests show fuel savings of up to 15 per cent and a reduction in emissions of around 8 per cent.
The latest Mercedes-Benz model to arrive in New Zealand, the C-Class, will get the stop-start function further down the line.
Meantime, the new four-door line-up uses petrol and diesel engines mated to seven-speed automatic gearboxes with manual mode. The carmaker says the engines are among the cleanest available.
There are only a handful of cars in New Zealand that can better the 160g/km European emissions figure, most of them smaller models including the petrol-powered Smart ForTwo coupe and Honda Jazz, the diesel-powered Volkswagen Polo, Fiat Punto, Kia Cerato, and the Prius and Civic hybrids.
Joining them now is the C220 CDI Mercedes-Benz sedan. The company says the car's 125kW/400Nm 2.2-litre four-cylinder turbodiesel engine has a CO2 rating of 156g/km.
The boosted 135kW/250Nm four-cylinder 1.8-litre petrol engine in the C200 emits a claimed 169g/km and the 170kW/300Nm 2.8-litre V6 in the C280 around 219g/km. The $250,000 Lexus LS600hL hybrid with its 5-litre V8 engine also has a 219g/km rating.
Fuel economy across the C-Class range has improved, too. The carmaker claims the C220 CDI is good for a town and around average of 6.7 litres/100km (41mpg). It says the 1.8-litre unit does around 8.2 litres/100km (35mpg) and the V6 about 9.4 litres/100km (30mpg).
The new C-Class is bigger inside and out than the outgoing W203 series but weighs only around 5kg more in C200 guise - 1490kg compared with the old car's 1485kg. The V6 C280 weighs 1555kg, the same as the outgoing C350 with its bigger 3.5-litre V6 engine.
In a nutshell, the new model is a far better quality package than the W203. It's younger and fresher - gone is the cigarette lighter - but with old-world refinements. There is more interior room for arms and legs. Visibility from the driver's seat is as good as it gets.
Ride and handling is another strength, on a rear multi-link and front-strut suspension system that's had an evolutionary tweak here and there since the 190 model of the 1980s. The turning circle rivals a pushbike.
Pity Mercedes-Benz didn't put the cruise control stalk somewhere else. Like most Mercs, it clashes on the left of the steering column with the indicator/windscreen wiper stalk. The push-button lid on the dashboard that hides the information screen is a bit messy. Customers who order satellite-navigation - available now - get a lid that opens and shuts on its own.
The new C-Class sedan is priced between $69,900 and $93,900. It comes with a world of bells and whistles and safety systems. What you see is what you get for between $69,900 and $93,900.