Berlin - The German car industry welcomed Tuesday a deal between France and Germany on setting European limits for vehicle emissions as "an acceptable compromise, although less than ideal."

The agreement was announced by Chancellor Angela Merkel and President Nicolas Sarkozy on Monday, following a joint ministerial meeting between the two dominant powers in the European Union.

Matthias Wissmann, president of the VDA German automobile industry association, told the daily Tagesspiegel: "The proposal is better than that put forward by the European Commission, although not ideal."

And BDI confederation of German industry spokesman Werner Schnappauf called the deal an "acceptable compromise," paying tribute to Merkel for "forcefully representing" the German car industry.

The commission, the EU's executive branch, indicated the deal might be premature.

The commission, "congratulates France and Germany on the convergence of their views," but the legislative process "remains in progress, so there is no question of amending our proposals," a spokesman said.

The two leaders agreed a limit on carbon dioxide (CO2) emissions of 120 grams per kilometre for new cars by 2012.

The German car industry is fearful that tough emission targets could disproportionately penalize luxury cars manufacturers like Daimler, BMW and Audi with their relatively high fuel consumption and emissions and favour French and Italian makers of economy cars.

Merkel insists the limit should apply across the range for each carmaker, leaving carmakers the possibility of continuing to produce high-emission luxury models, so long as they compensate by making low-emission models.

Germany's Greens condemned the deal. Spokeswoman Renate Kuenast, a former minister, said Merkel had caved in to the demands of the German car industry.

"This is typical Merkel. She starts out as climate saviour, and then she breaks it all down so that there is no more climate policy left," Kuenast told the daily Passauer Neue Presse.

Merkel has made combating climate change a core theme since becoming chancellor in November 2005.

The German environmental organization BUND also condemned the deal, accusing German carmakers of holding back environmental progress in the industry. (dpa)