Tokyo banned diesel motors in the late 90s. As far as I know that didn’t kill Toyota.

At the same time European car makers started to lobby for particle filters that were supposed to solve everything. The politics who where naive enough to believe them do share responsibility, but not as much as the european auto industry that created this whole situation.

Also, you implies that laws are made by politicians without any intervention of the industries whatsoever. I think you know that it is not how it works.