* Climate activists blame car owners for pollution
* VW CEO says auto industry working to cut emissions
* Climate activists say higher auto sales are problematic (Adds comments by VW CEO Herbert Diess)
By Edward Taylor
FRANKFURT, Sept 9 (Reuters) - Climate groups, including Greenpeace and Deutsche Umwelthilfe, called on Monday for sport-utility vehicles to be banned as part of a wider campaign to curb pollution by the auto industry.
Carmakers should stop developing large, heavy cars and vehicles with internal combustion engines, the "Exit" consortium said at a news conference on the eve of the Frankfurt auto show.
"As long as SUVs rather than small electric vehicles dominate automotive transport, cars will remain the problem child for us climate activists," the consortium said.
In a debate with the lead spokeswoman from "Sand in the Gearbox" - a coalition of activists who see the automobile as an outmoded form of transport and called for a boycott of the show - Volkswagen Chief Executive Herbert Diess said his company was primarily committed to providing individual mobility and that ultimately, consumers decide what they buy.
Volkswagen had developed several frugal and zero-emission vehicles, including the VW Lupo, which had ultimately proven less popular that larger more spacious cars, Diess said.
"SUVs is what the customer wants," Diess said while underscoring Volkswagen's commitment to building affordable electric vehicles as well.
"Owning a car is for many people part of having a higher quality of life. We need to ensure that even middle and lower income families can afford an electric car," Diess said.
Regulators have in their power to incentivise buying behaviour, the German executive said, rejecting a call for an outright ban of cars or certain types of vehicle.
Switching to renewable forms of energy and cutting dependence on coal-fired power stations was another way to push climate goals, Diess added.
The German automaker is preparing to launch a raft of hybrid and electric vehicles to try to leave behind a diesel emissions cheating scandal which has cost the company more than 30 billion euros ($33 billion) in refit costs and fines.
Hybrid vehicles can help cut carbon dioxide pollution, carmakers say.
"These fake arguments brought forward by the industry are exactly the reason why we are taking to the streets," said the spokeswoman for Sand in the Gearbox, which has called for a blockade of the Frankfurt show and increased use of bicycles.
"Volkswagen is by definition interested in selling more cars, so they are not really part of the solution," said the spokeswoman, who declined to give her real name, but calls herself Tina Velo.
Activists say job losses among the auto industry's 800,000 workers in Germany could be recouped via extra investments in public transport and railways.
Those assembly workers who were still out of a job could be retrained to work in care homes, Velo said.
($1 = 0.9052 euros) (Reporting by Ilona Wissenbach and Edward Taylor; Editing by Mark Potter and Dan Grebler)