FRANKFURT • Embattled German vehicle manufacturer Volkswagen looks to have struck a deal with the US authorities over compensation for car owners in its massive engine-rigging scandal, according to a newspaper report yesterday.

German daily Die Welt reported that VW had agreed to pay US$5,000 (S$6,740) to each owner in the US of a car fitted with the suspect software that skews the emissions of its diesel engine.

On top of this, VW would foot the bill for refitting each engine, the newspaper said.

Some 600,000 vehicles in the United States are involved.

According to other media reports, VW may even repurchase the affected cars from their owners.

The speculation sent VW's shares soaring 7.5 per cent to an intraday high of €130 (S$200) on the Frankfurt stock market yesterday, after they had already jumped by more than 6 per cent the day before.

Neither VW nor the US Justice Department or environmental agency EPA were willing to comment on the report.

But a judge in San Francisco had given both sides until yesterday to reach an agreement, otherwise the case would have gone to trial.

Die Welt said that a detailed plan for refitting the engines of the vehicles affected in the United States had not yet been drawn up.

Bloomberg Business News reported that VW had agreed to set aside "at least US$10 billion" to resolve civil claims by the US government and lawsuits by US car owners.

VW is battling to emerge from the scandal that began last September when it came to light that the car maker had installed in 11 million diesel engines worldwide software to cheat in emission tests.

AGENCE FRANCE-PRESSE