Drivers who refuse to fix their cars would be fined and repeat offenders would face having their registration suspended.
The new regulations, expected to be introduced in December, are detailed in a report by the state's Environment Protection Authority into the effects of vehicle air and noise emissions limits.
The report says that in the first year about 8100 motorists would be expected to be caught for pumping out too much pollution, or being too loud.
If those motorists want to keep driving their cars, the EPA estimates that repairs and testing fees would be about $1261 each.
Over the next decade, the report says almost 81,000 cars are likely to break the regulations, with the average costs of repairs and testing over that period being about $1000 a vehicle.
New limits mean that most cars would be banned from pumping out exhaust smoke for "a continuous period of 10 or more seconds", and that their noise would be no more than five decibels above the level "established for the vehicle when it is certified".
"The beneficiaries of the regulations are the Victorian environment and the wider Victorian community, with reduced emissions leading to improved overall health and amenity outcomes," the report says.
The net value to the community was estimated at $249.3 million over 10 years, while the cost to motorists would be $56 million over the same period.
RACV public policy manager Brian Negus questioned the accuracy of the figures supplied by the EPA.
"My initial response is that we need to be very careful in looking at their stated benefits - they seem to be very high," Mr Negus said.
"We would support remaking the current regulations ... but as to extending it to some of the areas where there are huge costs involved, there needs to be very careful consideration of that."
Environment Minister Ryan Smith's spokesman James Martin said the updated regulations were aimed at excessively smoky or noisy vehicles.
"These are normally associated with poorly maintained clunkers, or hotted-up cars that contribute to poor air quality, exacerbate health issues or result in sleep disturbance," Mr Martin said.
The EPA report says new regulations would enable easier detection of polluting vehicles as the "EPA anticipates using remote sensing to increase the ability of detecting high-emitting vehicles".
It also expected restrictions on petrol vapour emissions at service stations would cost the industry more than $100 million in the next 10 years, a cost likely to be passed to motorists.
The report says emissions limits would be a better tool than mandatory testing, which would have seen 25,000 light commercial vehicle drivers forced to get special services, costing about $437 a year.
