Land Rover and Jaguar face devastating EU fines – up to nearly £17,000 for each car off the assembly lines – following their sale to Tata Motors next month, under a tough new emissions regime.
Birmingham MP Richard Burden (Lab Northfield) condemned the "illogical" proposals which would penalise smaller manufacturers, as he called for the Government to intervene.
He won a pledge from ministers to monitor the rules when he raised his concerns in the House of Commons.
The European Commission is drawing up plans to fine manufacturers unless they meet tough new targets for carbon dioxide emissions. But businesses will be judged by the average level of pollution created by the cars they manufacture.
It means Jaguar, in Castle Bromwich, and Land Rover, in Solihull, would escape fines if they were still owned by motoring giant Ford, which also produces a number of small cars with low emissions – giving it a company-wide average within the EU limits.
However, as Ford is selling the businesses to Indian firm Tata – with the sale expected to be finalised next month – the Midland carmakers' models are set to attract massive fines.
The EC is working on plans to force manufacturers to reduce CO2 emissions to an average of 130 grammes per kilometre by 2012.
Under the current proposals, carmakers will be fined up to £68 for every gramme per kilometre over the limit from 2015.
Land Rover and Jaguar’s most fuel-efficient vehicle, the X-Type two-litre diesel, currently emits 149 g/km – which means the company would face a fine of £1,292 per vehicle.
Other vehicles would be hit harder. The Range Rover V8 emits 376 g/km and would attract an EU fine of £16,728 per vehicle.
The company has invested £700 million in new, cleaner technologies, and recently unveiled its new LRX diesel hybrid, which could meet the 120 g/km target.
However, it has warned it would not be possible for existing models to meet the EU target.
Mr Burden told ministers: "I hope we will continue to keep a close eye on some of the EU regulations being shaped that enable manufacturers that produce lots of models – some with quite poor environmental performance – to be subject to fewer penalties, as long as they also produce other cars that have smaller engines.
"Such would be the impact because those penalties are measured across the fleet of the manufacturer. A penalty is imposed on manufacturers not for producing less fuel efficient cars, but for being a smaller company producing less efficient cars.
"In other words, a company such as Fiat, the Italian company that produces Ferraris, would be hit less under that regulation, unless certain safeguards are built in, than Aston Martin, a British company based in the UK. Why? Because Fiat owns Ferrari and Aston Martin is an independent company. That would be the only difference. That is illogical."
The EC is proposing to exclude firms producing fewer than 10,000 vehicles per year, which would help smaller manufacturers such as Aston Martin, based in Gaydon, Warwickshire, Mr Burden said.
However, Jaguar/Land Rover produces 286,000 vehicles a year at its sites including Castle Bromwich in Birmingham and Lode Lane in Solihull.
"Unfortunately, that exemption does not meet the needs of another important British company: Jaguar Land Rover, on which thousands of jobs depend in my region and the North-west," said Mr Burden. "It will face big penalties as a result of those regulations simply because it is becoming independent of Ford and is therefore not part of a bigger group."
A spokesman for Land Rover and Jaguar last night said: "We are ahead of the industry in improving CO2 emissions. Least year we announced the £700 million investment in developing new technology and vehicles. However, the targets proposed by the Commission are not achievable.
"There is a lot of lobbying by the industry at the moment, in terms of gaining recognition from the EU and from ministers that many specialist manufacturers will be unable to meet these targets."
Treasury Minister Angela Eagle told Mr Burden the Government was committed to meeting the EU targets but added: "I am happy to assure him that the Government are aware of the points that he makes and are keeping a close eye on the progress of discussions about the development of EU regulations in Europe."
The German government is also reportedly lobbying for the proposals to be toned down, following concern from BMW and Mercedes.