The decline took average new car carbon emissions down to 132.2 grams per kilometer in 2012, close to a 130g/km target for 2015, according to data from the European Environment Agency (EEA), which provides scientific data to guide policy-making.
With the 28-nation European Union likely to reach easily its 2015 target, the European Commission has proposed a C02 target of 95g/km for 2020.
But Germany, seeking to protect its luxury carmakers, insisted that the bloc tear up agreement reached in June on implementing the goal.
Member states are now trying to agree on a revised compromise on more fuel-efficient, less polluting vehicles.
Of the large manufacturers, Fiat had the lowest average emissions at about 117g/km, while Renault and PSA/Peugeot-Citroen, at about 120g/km, were also well below average. At the other end of the scale, cars from Mercedes-Benz emitted 143g/km; Volvo averaged 142g/km.
Although most major carmakers are on track, they will have to sell increasingly efficient vehicles to meet future targets.
Analysts say the 95g/km 2020 goal as an average across the EU fleet is achievable using conventional combustion engines, but industry opinions are divided over whether pushing below that level could be done with existing engines or require a major increase in electric and hybrid vehicles.
The average car sold in the EU is now over 20 percent more efficient than a decade ago.
