German carmaker BMW AG (BMW.XE) recorded the biggest cut in greenhouse gas emissions from its passenger cars for the second straight year in 2008, leading its fellow European automakers towards compliance with a mandatory 2015 CO2 reduction target, a study showed Tuesday.

The study by the Brussels-based European Federation for Transport and Environment, an association which promotes environmentally friendly transport, showed that the German carmaker reduced its overall carbon dioxide emissions to 154 grams a kilometer in 2008, a 10.2% reduction from 2007, mainly due to new fuel-saving technologies.

Italian carmaker Fiat SpA (F.MI) had the lowest CO2 emissions in 2008, with only 138 grams a kilometer, down 2.9% compared with 2007, the study showed. Volkswagen AG (VOW.XE), Europe's largest automaker by sales, cut emissions by 3.3% to 159 grams a kilometer.

Last year, the European Union approved new rules aimed at gradually limiting CO2 emissions from cars. Starting in 2012, each carmaker will have its own specific target, and by 2015 all new cars sold in the E.U. will have to emit, on average, no more than 120 grams of CO2 a kilometer, from an average of just under 160 grams in 2007. Engine technology will cut emissions to 130 grams, while complementary measures, such as energy-saving tires, will cut an additional 10 grams.

"The industry is slowly waking up to the challenges ahead," said Jos Dings, director of the European Federation for Transport and Environment. Those carmakers farthest from their targets were also the boldest in cutting emissions last year, he added.

None of the carmakers has reached its target yet, with France's Peugeot SA (UG.FR) the closest, only 11 grams away, and Daimler AG (DAI), the maker of luxury and big Mercedes-Benz cars, the farthest away, with 40 grams to cut, the study showed.

Dings said it is hard to make a prediction on future emissions trends, but he said carmakers that have a big gap to close between their emissions and their target will start doing so in the next couple of years.

The study looked at European Commission data on car sales in 25 of the E.U. countries, excluding Slovakia and Bulgaria, which accounted for less than 1% of the bloc's car market last year.

 
                CO2 emissions cuts, grams a kilometer: 
 
                         2008   2007   Reduction 
 
BMW                       154    172     -10.2% 
Mazda                     158    172     -8.2% 
Hyundai                   149    161     -7.6% 
Ford                      152    163     -6.7% 
Suzuki                    156    164     -4.9% 
Nissan                    161    168     -4.0% 
Daimler                   175    182     -3.8% 
Volkswagen                159    165     -3.3% 
Renault                   143    147     -3.2% 
Fiat                      138    142     -2.9% 
Toyota                    147    150     -2.4% 
General Motors            153    157     -2.3% 
Honda                     154    157     -2.2% 
Peugeot                   139    142     -2.2% 
 
AVERAGE                 153.5  158.7     -3.3% 
 
 
                Distance from CO2 emission targets: 
 
                    2015 Target   2008 Avg CO2   Distance to target 
 
Peugeot                 128           139                 8% 
Renault                 129           143                10% 
BMW                     138           154                11% 
Fiat                    121           138                13% 
Hyundai                 130           149                13% 
Toyota                  127           147                14% 
Ford                    129           152                15% 
Honda                   130           154                15% 
General Motors          128           153                17% 
Volkswagen              133           159                17% 
Nissan                  131           161                19% 
Mazda                   125           158                21% 
Suzuki                  122           156                22% 
Daimler                 135           175                23% 
 
AVERAGE                 130           153.5              15%

-By Alessandro Torello, Dow Jones Newswires; +32 2 741 14 88; alessandro.torello@dowjones.com