* German Dec car sales down 1 pct to 254,000 -source
* German 2017 diesel-car sales down 13 pct to 1.34 mln -source
* German KBA watchdog due to publish 2017 sales on Thursday (Adds detail on diesel car sales, EU background)
BERLIN, Jan 3 (Reuters) - Sales of new passenger cars in Germany rose 2.7 percent last year to about 3.44 million vehicles but registrations of diesel models plunged amid a threat of possible driving bans, an industry source said.
Pressure is growing on Germany to tackle diesel pollution as dozens of cities including Munich and Stuttgart, where BMW and Daimler are based, could face penalties for allowing nitrogen dioxide (NO2) levels in excess of European Union limits introduced in 2010, the DUH environmental lobby has said.
Sales of diesel-engine cars in Europe's largest auto market declined about 13 percent last year to 1.34 million, the source said, declining to be identified ahead of publication of official sales data.
The country's KBA automotive watchdog is expected to publish official passenger-car registrations on Thursday.
German car sales fell about 1 percent in December to about 254,000 vehicles because of two fewer selling days than in the same month a year earlier, the source said, adding that private-sector registrations were up about 5 percent last month.
The drop in Germany mirrors declines in Italy and France where December sales fell 3.2 percent and 0.5 percent respectively. Registration of diesel cars in France fell below 50 percent last year for the first time since 2000, industry data released on Monday showed. (Reporting by Andreas Cremer; Editing by Maria Sheahan and Adrian Croft)