The head of the Volkswagen Group has warned that proposed emissions targets in Europe could end up significantly hiking car prices.

According to Automotive News Europe, Volkswagen Group CEO Herbert Diess said the European Union’s proposed emissions targets for 2030 were “too demanding”, explaining the resulting push to electric vehicles could render car-buying too expensive for many consumers.

Speaking to reporters at the recent North American International Auto show in Detroit, Diess said the German automaker would be able to meet the proposed emissions targets only by increasing its sales of fully electric vehicles to around 50 percent of the Group's total.

"I am not sure how many customers could afford it," Diess added, explaining that the automaker’s “broader customer base" would likely be the hardest hit.

According to the report, he said developing the firm’s Up city car to be compliant with the targets could, for example, see its price rise by about €3 500 (that’s the equivalent of about R55 000). The price for the Polo hatchback could rise by €4 000 (around R63 000), he added.

“I am not sure how many customers could still afford our entry-level models,” Diess reiterated.

Earlier in January, Christian Dahlheim, head of sales at VW, said higher material costs associated with meeting the upcoming emissions regulations could significantly increase vehicle prices.

"Volkswagen is using various resources to counteract rising costs," Dahlheim said. "Nevertheless, it is clear that it will not be possible to completely offset the higher material costs."