A Volkswagen (VW) logo is seen on a car's front at a scrapyard in Fuerstenfeldbruck, Germany, May 21, 2016.
A Volkswagen (VW) logo is seen on a car's front at a scrapyard in Fuerstenfeldbruck, Germany, May 21, 2016. Reuters/Michaela Rehle/File Picture

Volkswagen AG will reportedly pay more than US$15 billion (AU$20.3 billion) as settlement in the US diesel-gate scandal. The German carmaker will announce Tuesday its settlement to about 475,000 owners of its diesel-powered models in the US.

Two people familiar with the negotiations told Bloomberg that Volkswagen will pay US$10.03 billion (AU$13.56 billion) total to car owners, covering both the value of their vehicles before the diesel-gate scandal hit in September compensation of as much as US$10,000 (AU$13,500) each.

It will also pay US$2.7 billion (AU$3.6 billion) in fines to the US Environmental Protection Agency (EPA) and the California Air Resources Board, as well as US$2 billion (AU$2.7 billion) on clean-emissions technology. Another source told the paper that Volkswagen would announce a settlement with New York and other states for about US$400 million (AU$541 million).

The figures, which are already close to its US$18.3 billion (AU$24.8 billion) budget to cover the cost of the scandal, could increase some more if the company misses its buyback and repair deadline by mid-2019.

Prior owners of affected vehicles will also get compensation, although just half of what the current owners would get, while those who leased cars will also get compensation, according to Reuters sources.

The settlement also does not include lawsuits from investors or criminal investigation by the Justice Department. It does not address civil penalties under the Clean Air Act or include larger 3.0 litre Audi, Porsche and VW vehicles that emitted less pollution than 2.0 litre vehicles.

US District Judge Charles Beyer will hold a hearing on July 26 to decide whether to grant preliminary approval to the settlements. If the settlements are approved, the judge would later hold another hearing to give his final approval, according to the Reuters source. VW buybacks are expected to start no earlier than October.

VW Diesel-gate scandal

In September 2015, it was found that the German company had intentionally installed “defeat devices” in its diesel cars to cheat the EPA emissions tests in 2009. The devices were able to control the exhaust output of the vehicles during regulatory testing. During actual driving of the vehicles, however, it was found that the vehicles could emit up to 40 times more pollution.

In October, VW’s then-US chief exec Michael Horn admitted before the Congress that the company had been dishonest.