Mercedes-Benz will introduce turbocharged engines across its entire lineup in the next two years.

“All our vehicles will have turbocharged engines in series production by the end of 2010 at the latest,” Thomas Weber, Daimler board member responsible for research and development, told Automotive News Europe at a press event in Dusseldorf, Germany, on Thursday.

Forthcoming legislation in Europe and the United States is forcing automakers to reduce auto emissions.

Demand for turbochargers is growing because they offer a proven and relatively inexpensive way to reduce fuel consumption. With the addition of a turbocharger, Daimler will be able to install smaller, lighter and more fuel-efficient engines without sacrificing performance.

Under current proposals, the European Commission will ask the German automaker to cut its average fleet emissions from 178 grams per kilometer to 138 g/km by 2012. The Commission will fine automakers that fail to meet the targets.

Improving the efficiency of its existing engines is the first part of Daimler’s strategy to reduce CO2 emission levels across its fleet. Weber said the medium-term step would be to introduce more hybrid technology. The S class--Mercedes’ flagship sedan--will be offered as a full hybrid vehicle starting in 2009.

Weber also said that zero-emission driving is the German automaker’s long-term goal. To get there, Daimler plans to use technology such as fuel cells and electric-powered vehicles. A full-electric version of the ForTwo from Mercedes sister brand Smart goes into production in 2010.