A top court in Germany will decide on Thursday whether heavy polluting diesel-engine vehicles can be banned from the country’s cities in a ruling which could prove costly for car manufacturers.
Cleaner air groups have sought to restrict the use of diesel-engine cars in the country because they contain particulate matter and nitrogen oxide, which can cause respiratory disease.
Environmental campaigners said that levels of particulate matter have exceeded the European Union threshold in 90 German cities.
Earlier this year Deutsche Umwelthilfe (DUH) sued nine German cities including Stuttgart and Dusseldorf in a bid to allow municipalities to ban diesel cars from city centres.
Germany’s federal administrative court in Leipzig is expected to rule on Thursday whether such bans are legal.
Car makers have consistently appealed bans by local courts which sought to bar heavy polluting diesel cars on days in which emissions are particularly heavy.
Manufacturers are fearful of an outright ban because this could result in a fall in vehicle resale prices, which are known as residuals.
"The decline in diesel residuals towards the end of 2017 showed a clear acceleration, ending the year at 52.6 per cent, having started the year at 56 per cent," analysts at Evercore ISI said in a note on Wednesday.
Diesel residuals are used as a benchmark for pricing leasing and finance contracts and any significant drop in sales could have a serious knock on effect for the car making industry.
Diesel car manufacturers have been the subject of criticism since 2015, when German-owned Volkswagen admitted it cheated on US diesel exhaust tests.
The UK and France have committed to banning new diesel and petrol cars by 2040. European capitals Athens, Paris and Madrid have said they will ban diesel vehicles from city centres from 2025.
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