Harald Krueger, CEO of German carmaker BMW shows the German Chancellor Angela Merkel an 'i Vision Dynamic' all-electric concept car at the 2017 Frankfurt Auto Show.

Auto giant BMW has said a proposal by the German government to make car companies retrofit polluting diesel cars "doesn't make sense for us."

Millions of diesel drivers in Germany woke up Tuesday to find that their coalition government had agreed on a package of measures designed to prevent diesel driving bans starting up around the country.

The "Concept for Clean Air and Ensuring Individual Mobility in our Cities" proposal was subsequently presented during the mid-morning by Transport Minister Andreas Scheuer (CSU) and Minister of the Environment Svenja Schulze (SPD).

Drivers were told they should be able to trade in their cars at a favorable discount for emissions-compliant models, or that their cars could be returned to be retrofitted with hardware that could curb the emissions.

However, Germany's powerful motor manufacturers have offered a lukewarm response to that policy.

BMW Group said in an emailed statement to CNBC that it would reject the hardware retrofit option as it "does not make sense for us in this case." The car company said hardware measures would only be available to customers from 2021 and would have a "negative impact on quality, weight, consumption/CO2 emissions and performance in the vehicles."

BMW said it did welcome, however, the government's "concept plan" as a good way to ensure the continued use of diesel.

The firm added that from October anyone leasing or buying new BMW cars in Germany would get an environmental bonus of 6,000 euros ($6,925). For nearly new vehicles, or demonstration vehicles, the figure drops to 4,500 euros.