Different pollution, not necessarily more. Tuning the engine for more fuel efficiency generates more nitrogen oxides (above the legal limit in this case) and less carbon dioxide.
Your flaw is the assumption that all, or even most, customers prefer the non-tangible idea of "reducing pollution" to the tangible experience of greater performance.
That's exactly the problem with the public's understanding of pollution [1]. If they can't see people dying in front of their eyes, they won't believe it...
My understanding was that this performance came at the expense of more pollution, which is what the gov is regulating?