The case at the Federal Court of Justice was brought by campaigners of the group Environmental Action Germany (DUH), and marked the latest example of activists turning to the judiciary to enforce climate action.

The plaintiffs built their case on a landmark 2021 ruling by Germany's Constitutional Court that the state has a duty to protect future generations from the effects of climate change and sought to apply the principle to companies.

But handing down its ruling, Germany's highest court for civil and criminal matters rejected DUH's arguments. It found that citizens' personal rights were "not affected... by the business activities of the defendant," in a decision that upheld rulings by lower courts.

"Private individuals cannot demand that automobile manufacturers refrain from placing passenger cars with internal combustion engines on the market" ahead of European Union deadlines, it said.

The DUH case demanded a 2030 phase-out of fossil fuel-powered cars -- five years earlier than the target year in a European Union plan that was last year watered down after intense lobbying by automakers.

DUH executive director Barbara Metz said the decision did not "absolve Mercedes-Benz and BMW of their responsibility for the climate crisis, which stems from their sale of millions of internal combustion engine vehicles in order to maximise profits".

But she said the court had made it clear that responsibility for action lies with the federal government, and called on Chancellor Friedrich Merz to step up action to protect the climate.

The DUH said it was also considering whether to file an appeal to the Constitutional Court.

- Activists turning to courts -

Mercedes welcomed the ruling for providing "a clarification of our democratic system".

"Setting legal requirements for climate targets is the responsibility of the legislature, not the judiciary," said the group in a statement, adding that climate protection remained a key consideration.

BMW added that the decision contributed to "legal certainty for companies operating in Germany".

"Throughout the proceedings, we have consistently maintained the position that the debate over how to achieve climate targets must take place within the political process through democratically elected parliaments," the group added in a statement.

The legal action is part of a wider trend of climate activists turning to courts.

Campaigners celebrated last May after a regional court in northern Germany ruled that companies could in principle be sued over the consequences of their emissions.

However, the court did not award damages to a Peruvian farmer, Saul Luciano Lliuya, who had brought the case against utility firm RWE.

The case against the carmakers was passed up to the Federal Court of Justice on appeal after lower courts in Stuttgart and Munich ruled in favour of the firms, finding they had complied with relevant regulations.

German carmakers have invested billions in the transition to electric and hybrid vehicles in a bid to meet EU climate targets.

But progress has been slowed by lower than anticipated demand, with many consumers put off by higher upfront costs and still patchy charging infrastructure.

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BAYERISCHE MOTOREN WERKE AG

Mercedes-Benz Group

RWE