A looming ban on the sale of new petrol and diesel cars has plunged Europe’s car industry into crisis, the boss of Mercedes-Benz has warned.

Ola Kallenius has urged Brussels to urgently review the policy to avoid the sector’s collapse, as he said carmakers are facing their bleakest-ever outlook.

As well as the upcoming 2035 ban across the Continent, European carmakers are also battling Donald Trump’s tariffs and heightened competition from cheaper Chinese rivals.

Mr Kallenius told German newspaper Handelsblatt: “We need to do a reality check. Otherwise, we’ll drive full speed into the wall.”

“Of course we have to decarbonise but we must not lose sight of our economy.”

He has called for looser net zero rules after the industry was caught up in the US president’s trade war, which has culminated in a 15pc tariff on European cars being exported to the US.

This is up from 2.5pc before Mr Trump re-entered the White House, but lower than the 27.5pc imposed after his April 2 “liberation day” tariffs announcement.

Mr Kallenius said: “The environment in which we operate is extremely complex at the moment.

“Our industry is experiencing heavy rain, hail, storms and snow at the same time. Car manufacturing is a tough business, more so than ever.”

Mr Kallenius, who took over as chief executive in 2019, also pointed out that any deadline will simply rush motorists into buying petrol or diesel cars.

“That doesn’t do the climate any good,” he said.

His comments echo those of German rival BMW, which has also argued that the 2035 ban should be delayed.

Oliver Zipse, BMW’s chief executive, said in October that the date was “no longer realistic” and could “threaten the European automotive industry in its heart [leading] to a massive shrinking of the industry as a whole”.

The latest intervention will no doubt also raise questions for the Labour Government, which reinstated the UK’s 2030 ban on the sale of new petrol cars after coming to power.

Weak demand for electric cars has already fuelled job losses across some of Britain’s biggest manufacturers, including at Vauxhall owner Stellantis and Ford.

Liam Butterworth, the boss of UK engineering giant Dowlais, recently urged Sir Keir Starmer to review the policy owing to the stuttering transition to electric vehicles (EVs).

He said: “This is an industry that has been heavily focused on combustion engines for many decades. It takes time to transition to an EV world, and the consumer needs to be ready as well.”

It comes as Chinese manufacturers are rapidly taking market share from legacy European manufacturers.

Chinese sales across 28 European countries surged 91pc in the first half of the year, reaching 5.1pc of the market, according to figures from Jato Dynamics.

This has meant that Chinese brands now collectively outsell Mercedes in Europe.

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