Car sales have dropped sharply, forcing manufacturers to cut production and scale back profit forecasts. Some German and French factories have been temporarily closed amid growing concern the EU is heading for a recession.

In light of the economic troubles, the commission is revisiting its strategy for the industry. A conference was held in Brussels on 29 October to review results and collect feedback.

The conference comes as the EU debates legislation to cut car emissions of carbon dioxide by a fifth – to 130g/km by 2012. Participants agreed on the goal of developing eco-friendly cars as a way to both fight global warming and keep the industry competitive. A task force to promote green cars will be set up.

Cars account for some 12% of CO2 emissions. The conference agreed that efforts to reduce emissions should target not just vehicles but also fuel, drivers and roads. And research should focus on the most promising technologies, like hybrid, electric and hydrogen cars.

The commission drew up its strategy for the auto industry in 2007. This comprehensive plan aims to reduce regulatory burdens, improve access to overseas markets, foster innovation through research and make transport safer.

Car makers have pressed the EU for a €40bn loan to help develop greener vehicles. The idea gained support in Europe after the US recently approved €20bn ($25bn) in low-interest loans to the American auto industry to finance more fuel-efficient cars.

The limits on car emissions are part of a climate-change package that the EU aims to pass by the end of the year. The commission has urged EU governments not to let the package fall victim to the economic slowdown.

A key barometer for the European economy, the car industry represents some 3% of GDP and 7.5% of manufacturing as a whole. Employing more than 2 million people directly, it supports at least 8 million other jobs.