Volkswagen and the U.S. Department of Justice reached a deal in principle Thursday to resolve claims the German automaker rigged nearly 600,000 cars so they could comply with American clean air laws.
Senior U.S. District Judge Charles Breyer said a final settlement is expected to include an offer for Volkswagen to buy back the cars or fix them.
Compensation to the owners of the vehicles will also be part of the settlement package but Breyer did not give details, saying only there will be "substantial compensation." Those briefed on the agreement say Volkswagen will make payments to owners totaling more than $1 billion.
Some owners of new models that were recently repaired may receive little compensation. But owners of older Volkswagens, about 325,000 of them, will likely get more because repairs will be more costly.
The company is facing a civil lawsuit after admitting in September that it included the cheating software in its diesel cars and sport utility vehicles sold since the 2009 model year. Tests showed those cars emitted up to 40 times the permissible amounts of the hazardous pollutant nitrogen oxide.
The financial impact on Volkswagen has been substantial. An analyst at Warburg Research estimated the scandal has cost the company more than $ 32 billion. In an attempt to recapture lost market share, the automaker cut prices on its vehicles.