VW's diesel emissions settlement to cost it £11bn
Volkswagen has agreed a record $14.7bn (£11bn) settlement in America over its diesel emissions scandal that will see owners paid up to $10,000 (£7,500) each in compensation.
The scandal-hit car giant will spend $10bn (£7.5bn) either buying back or repairing around 475,000 affected diesel vehicles, while it will compensate US owners with an extra $5,100 (£3,800) to $10,000 (£7,500) on top.
Terms of the settlement, revealed in court orders filed with the US District Court in San Francisco, showed that VW - now headed by Matthias Muller - will also pay governments $2.7bn (£2bn) for environmental mitigation and spend another $2bn (£1.5bn) for research on zero-emissions vehicles in the US.
It is understood to be the largest consumer class-action settlement against a car company in US history.
Volkswagen, based in Wolfsburg, Germany, is still facing billions more in fines and penalties, as well as possible criminal charges.
While this settlement relates to two-litre diesel engines, lawyers are still working on settlements for another 80,000 vehicles with three-litre diesel engines.
The two-litre settlement requires a judge's approval before it can go into effect, and owners can choose to decline Volkswagen's offer and sue the company on their own.
Volkswagen may also be forced to buy back all the two-litre vehicles unless it can find a fix that will bring the cars into compliance with US pollution regulations.
The company has already earmarked £12.7bn to cover recalls and other costs for the 11 million cars that were sold with the software globally.
The scandal was exposed last year when US regulators revealed that Volkswagen had fitted many of its cars with software to cheat emissions tests.
Investigators found that the cars emitted more than 40 times the legal limit of nitrogen oxide, which can cause respiratory problems.
Profits at Volkswagen fell almost a fifth at the start of the year as it dealt with the fallout.