"It is more than regrettable that the majority of member nations did not find the strength to strike a balance between protecting jobs and protecting the climate," VDA president Bernard Mattes said in a statement.

"Job security is lessened and Germany as an industrial location has been weakened," added Mattes, who represents carmakers such as Volkswagen, BMW and Daimler.

European Union nations, voicing concern over a U.N. report on global warming, agreed late on Tuesday to seek the 35 percent reduction in carbon dioxide emissions from passenger cars by 2030.

Several countries had sought a 40 percent reduction, in line with targets backed by EU lawmakers last week, but softened their position during late night negotiations in a step welcomed by the German government.

But Germany's auto industry remains disappointed with the result.

"With yesterday's vote we missed a chance to shape CO2 regulation for the time after 2021 in an economical and technologically realistic manner," Mattes said.

(Reporting by Edward Taylor; Editing by Keith Weir)