According to the document, titled Carbon Emissions Intensity for New Australian Light Vehicles 2016, the improvement in fuel efficiency of new light vehicles in Australia for 2016 was the lowest rate in the last 10 years - only 1.1 per cent, compared to 4.2 per cent in 2016 and 3.7 per cent in 2012.
The NTC's report found that a contributing factor to the slowed improvements in the national fleet's efficiency are because Australian preferences are shifting to larger, more powerful vehicles - such as SUVs and utes.
Australian-made vehicles are also identified as an area where emissions intensity is actually increasing - though there won't be anymore by the end of the year - with data showing an average of 213g/km in 2016, a 2.3 pre cent increase on the previous year.
Meanwhile, 'Green' vehicles - defined as cars that do not emit more than 120g/km - represented only 2.5 per cent of new car sales last year, down on the 4.7 per cent share achieved in 2015.
Paul Retter, CEO of the NTC, said if all Australians who purchased a new car last year had bought the most efficient car available, then the national average CO2 emissions intensity figure would have dropped to 75g/km, representing a reduction of 59 per cent.
Scott Ferraro, head of implementation for ClimateWorks Australia - an independent adviser committed to helping Australia transition to net zero emissions by 2050 - said the country is lagging behind the improvement rates of Europe and the US.
"Australia is currently well behind the European Union in terms of performance, with their 2016 average emissions intensity for passenger vehicles of 118gCO2/km, and they have a target to get to 95gCO2/km by 2021," he said.
"Even the US market is targeting approximately 105gCO2/km by 2025, which is over a four per cent annual improvement."
The NTC argues the most effective way to ensure higher efficiency gains to introduce light vehicle CO2 emissions standards, which already exist in 80 per cent of the global vehicle market, and are a major driver of emissions reduction.
Interestingly, Ferraro added that new cars purchased by government and business buyers have higher average emissions than private buyers, and more should be done to bring these fleets in line with the nation's average.
"The report found the Government fleet had a fuel efficiency rate of 201g/km and business cars were slightly lower at 187g/km," he said.
"This means there is great opportunity for fleet managers to invest in low emissions and electric vehicles to play a leadership role."
"A recent example is AGL’s announcement of a 10 per cent electric vehicle target for their own fleet," he added.
Other methods proposed are complementary measures like consumer education programs along with upfront and tax incentives for low- and zero-emissions vehicles.
Peak motoring authority, the Australian Automobile Association (AAA), also supports the callout for new regulations, while reiterating its desire for the government's Green Vehicle Guide to add a star-rating system and information based upon real-world vehicle emissions testing conducted under Australian conditions - the latter has already been undertaken by the AAA as a pilot program. Read our coverage here.