Volkswagen 'agrees $10bn payout' over emissions scandal

The money will mainly compensate 482,000 car owners affected by the scandal, sources say

Volkswagen's profits tumbled by nearly a fifth at the start of 2016 in response to the emissions scandal (AP)

Volkswagen has agreed to pay around $10.2 billion (£6.89 billion) to settle US claims over its diesel emissions cheating scandal, two people briefed on the matter have said.

The sources told Associated Press the money would go mainly to compensate 482,000 owners of cars with 2-litre diesel engines that were programmed to cheat on emissions tests.

Almost 1.2 million Volkswagen vehicles in the UK were said to be affected by the scandal, in which cars were programmed to turn on emissions controls during lab tests and turn them off while on the road.

Some money would be paid to the US government in penalties or to remediate the environmental damage caused by pollution, the sources said.

One of them said these terms could change by the time they are released by the court on Tuesday.

Owners could receive 1,000 to 7,000 dollars (£675 - £4,729) depending on their car's age, with an average payment of $5,000 dollars (£3,378), according to the sources, who have asked not to be identified due to a gag order on the case.

Owners would have a choice between selling their vehicles back to Volkswagen at the value before the scandal broke in September, or keeping the cars and letting the company repair them, the sources said.

The US Environmental Protection Agency has said the cars, which include many of Volkswagen's most popular models, can give off more than 40 times the legal limit of nitrogen oxide, which can cause respiratory problems in humans.

A test carried out by Adac, one of the world's largest independent motoring organisations, found massive levels of pollution are also being emitted by diesel vehicles built by a wide range of car makers.