A top German court will issue a hotly-awaited decision Tuesday on whether cities can ban older diesel cars from some areas, potentially upending transport policy and a disrupting a keystone industry.

Judges at the Federal Administrative Court in Leipzig last Thursday adjourned over the weekend, saying they needed more time to "deliberate very thoroughly" on the issue.

From 1100 GMT they will once again be in the spotlight, ruling on whether the cities of Stuttgart and Duesseldorf can legally ban older, more polluting diesel vehicles from zones worst afflicted with air pollution.

A finding in favour of environmentalist plaintiffs Deutsche Umwelthilfe (DUH) would not only affect the states of Baden-Wuerttemberg and North Rhine-Westphalia, whose respective capitals are on the docket, but the whole country.

Both the government and the car industry are against driving bans, fearing outrage from the millions of diesel owners whose lives would be disrupted and whose vehicles would lose value.

But the federal government is already preparing for the possible consequences, with plans for a cut-down version of diesel bans surfacing in the media over the weekend.

The transport ministry could later this year update traffic regulations to include the option of a city-ordered ban on certain routes, to alleviate pollution from harmful fine particles and nitrogen oxides (NOx).

- Coming to reason? -

The looming court decision "seems to be achieving a political effect already," said Gerd Lottsiepen, spokesman for environmentalist pressure group VCD.

It remained to be seen whether the government plans were "a distraction or a late coming to reason," the organisation added, arguing that route-based "small-scale driving bans will only shift the problem" to other parts of towns.

Meanwhile, city authorities themselves dread introducing a patchwork of local measures rather than applying a standard, nationwide solution.

They have long demanded a "blue badge" for the windscreens of the cleanest cars or those granted exceptions to bans.

For a driving ban to work, "we have to be able to tell diesel vehicles apart," Association of German Cities chief Helmut Dedy told news agency DPA at the weekend.

"There will have to be a single federal regulation using a blue badge" if the Tuesday ruling goes against the cities, he insisted.

The blue badge system favoured by local governments would allow vehicles access to whole zones of cities, rather than specific major roads.

- EU action looms -

The federal government and Germany's powerful auto industry lobby have always opposed any new restrictions for diesel cars.

Instead ministers led by Chancellor Angela Merkel have offered a billion-euro fund, partly paid for by industry, to improve public transport or upgrade fleets to electric buses.

Such measures are intended at least as much for eyes in Brussels -- where Germany and a slew of other EU member states risk legal action after sailing past a deadline to reduce air pollution -- as for those in town halls.

Some 70 German cities including Munich, Stuttgart and Cologne recorded average nitrogen dioxide levels above EU thresholds in 2017, according to the Federal Environment Agency (UBA).

Meanwhile, carmakers like Volkswagen, BMW and Daimler have struck a cooperative tone in the wake of VW's 'dieselgate' scandal, which saw it manipulate 11 million vehicles worldwide to fool regulators' emissions tests.

The firms have so far offered only updates to engine control software to reduce emissions, but a court decision in favour of diesel bans could up the pressure on them to provide hardware fixes to more-polluting cars.

A refit to the more than nine million cars built before September 2015, when the latest Euro 6 emissions standards came into force, would cost at least 7.6 billion euros, a study by analysts at Evercore bank found last week.

Car companies have already seen the market share for diesel vehicles in Germany plunge from 48 percent in 2015 to around 39 percent last year.

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