BERLIN, May 11 (Xinhua) -- Car dealerships and other sub-contractors in the German automotive industry face increasing financial pressure as a result of the "dieselgate" scandal, the German Federation for Motor Trades and Repairs (ZDK) told press on Friday.

ZDK president Juergen Karpinski warned that a collapse in diesel sales "threatened the existence" of many companies in the wider industry.

Karpinski lamented that there are more than 350,000 diesel vehicles with the previous motor type Euro5 worth around 4.5 billion euros (5.4 billion U.S. dollars) that are currently on offer in German dealerships. These cars were "very difficult to sell." He emphasized that the situation implied "losses of hundreds of millions of euros" for the motor trade.

Additionally, the calculation of the residual value of diesel leasing cars had been upset by the "dieselgate" scandal. Small and mid-sized companies (SMEs) in particular were suffering from having to offer customers unexpected rebates of up to 50 percent despite only having limited financial means available.

"Policymakers are not doing anything to support Germany's famous family businesses", the ZDK president complained. He highlighted that his organization has been demanding more costly hardware upgrades for popular cars like the Volkswagen "Golf" and "Passat" models since the start of the crisis and remained convinced that such measures offered a feasible and effective way of lowering nitrogen oxide emissions levels.

Karpinski argued that hardware upgrades would mark a decisive signal to diesel owners that policymakers would shield them from further harm caused by carmakers' emissions cheating. Such a move would "stabilize residual values, stabilize the financial situation of SMEs and prevent looming diesel driving bans."

While Angela Merkel's (CDU) fourth governing cabinet is still undecided on the subject of hardware upgrades, carmakers have repeatedly rejected the solution as being too expensive and time-consuming and favor cheaper software upgrades instead.

Recent studies indicate that diesel sales have been on a steep downward trajectory for several months in Germany. The development has largely been blamed on the specter of driving bans in densely-populated areas following a related landmark ruling by the Federal Administrative Court.

Given that 20 major German cities are set to fall short of binding EU clean air regulations by 2020, the European Commission has threatened to sue Berlin before the European Court of Justice unless it addresses the situation swiftly. According to the Federal Environmental Agency, diesel cars are responsible for more than 50 percent of harmful nitrogen oxide emissions in Germany.