UPDATE 1-Rheinmetall auto parts ops cashes in on CO2 trend

* Automotive division head sees further growth this year

* Says set to meet 2011 earnings targets

* IPO plans for division remain on hold

DETROIT, Jan 9 (Reuters) - The automotive parts supply business of German mid-cap Rheinmetall expects demand to grow this year for its efficiency-boosting engine parts like its variable valve control system or its exhaust gas recirculation (EGR) devices.

"If you want to achieve carbon dioxide emission targets of 95 grams per kilometer by 2020 for your fleet in Europe, there is no way to get around our products," KPSG Chief Executive Gerd Kleinert told Reuters during the Detroit auto show.

"The UniValve we offer has been proven to lower fuel consumption by 10 percent, since it can control not only exactly when the engine valves in the chamber open, but how far as well, optimising the efficiency of the combustion process," he explained.

Once Euro 6 emission norms are introduced for heavy commercial vehicles in Europe come January 2013, Kleinert said truck manufacturers will have little choice but to buy EGR cooling systems since adding urea will no longer be sufficient to reduce the emission of hazardous nitrous oxides.

"We are convinced that there will be further growth for our product line this year," he said, reaffirming 2011 targets that foresaw Rheinmetall's automotive division achieving 2.3 billion euros ($2.93 billion)in revenue and 140-150 million euros of operating profit.

Kleinert said that the group saw no point in reactivating the plan to spin off KPSG on the stock market as long as market conditions were so poor.

"Due to the volatility of capital markets, the IPO remains on ice," he said, adding that the decision would not hurt its growth plans at all.