European car makers have described plans to force them to cut back on harmful exhaust emissions as 'unbalanced' and 'damaging'.

The industry body said European Union targets were 'arbitrary' and would lead to job cuts and relocation of production abroad, BBC News reported on Wednesday.

The European Commission aims to increase the fuel efficiency of new cars by 18 per cent by 2012. It wants to ensure new vehicles emit no more than 130g of CO2 (carbon dioxide) per km, compared with 162g per km in 2005.

CO2 is a greenhouse gas that helps to trap heat in the atmosphere, contributing to global warming.

In a statement, the European Automobile Manufacturers Association (Acea) said the European Commission's proposals would damage Europe's economy "in terms of wealth, employment and growth potential", BBC News said.

Acea President Sergio Marchionne appealed directly to EU governments and the European Parliament to design a 'reasonable and level-headed' strategy, saying other means were available to reduce CO2 emissions.

The statement said the Commission's proposals would "lead to a loss of jobs and the relocation of production outside the EU, severely affecting several European regions".

However, European Industry Commissioner Guenter Verheugen urged manufacturers to see the plan as a spur to innovation.

"The motor industry faces a major challenge...I would urge them to face up to it and not consider it a burden but consider it a positive challenge," he said.

Environment Commissioner Stavros Dimas said that without the action the commission was proposing, the EU would not meet its greenhouse gas emission targets under the Kyoto treaty, or any post-Kyoto commitments.

The commissioners assured carmakers that the 130g per km average would not apply to each individual manufacturer but to the industry as a whole.

The commission had proposed measures last week to increase the use of biofuels. It also wants member states to impose higher taxes on high-emission cars.