Germany’s top administrative court has ruled that the country’s cities have the right to ban diesel cars, in a move that could have far-reaching consequences for the owners of 12m vehicles in Europe’s largest market. The ruling is a significant victory for environmental groups that say diesel bans are the only effective way to tackle the persistent problem of air pollution in German cities. But it comes as a fresh blow to the country’s mighty automotive industry, which is bracing for a new drop in demand for one its key products. Diesel cars accounted for 45 per cent of new registrations in January last year. That share has since fallen to 33 per cent. At issue are the high emissions of nitrogen dioxide (NO2) — a leading cause of respiratory disease — from diesel cars. Some 70 German cities have NO2 levels that exceed EU limits. Tuesday’s verdict will not lead to the automatic imposition of driving bans but it puts intense pressure on politicians and the car industry to come up with a swift response to the pollution crisis. Officials and analysts said one option would be to force carmakers to spend billions of euros to retrofit older diesel vehicles with expensive hardware solutions.