Volkswagen reaches deal in principle with US over diesel cars emissions scandal

German auto maker Volkswagen and U.S. authorities have reached a deal in principle to address the emissions scandal of diesel cars sold in the United States, a federal judge in San Francisco said Thursday.

U.S. District Judge Charles Breyer, who oversees the class-action lawsuits brought by American car owners against Volkswagen, said in a court hearing that the settlement includes buybacks of some diesel cars and compensation for U.S. drivers.

Earlier this year, the U.S. Department of Justice filed a civil lawsuit against the German auto maker for installing illegal devices to impair emission control system in nearly 600,000 diesel cars, which caused emissions to exceed U.S. standards.

"This agreement in principle addresses one important aspect of the department's pending case against VW, namely what to do about the 2-liter diesel cars on the road and the environmental consequences resulting from their excess emissions," Justice Department spokesman Wyn Hornbuckle said Thursday in a statement.

"The department's other investigations into VW's conduct remain active and ongoing."

Volkswagen confirmed on Thursday that the company has reached an agreement in principle with the Department of Justice, the Environment Protection Agency, and the California Air Resources Board.

"This agreement in principle will be incorporated into binding consent decrees by the Department of Justice and the FTC (Federal Trade Commission) in the coming weeks," Volkswagen said in a statement.

The agreement is a major step toward the company's efforts to address the emissions-cheating scandal.

Volkswagen has also reached an agreement on the basic features of a settlement with the class action plaintiffs in the lawsuit in San Francisco, which will be incorporated into a comprehensive settlement in the coming weeks, the company added.

As part of the settlement, Volkswagen will buy back up to 480,000 diesel cars in the United States and set aside additional funds to promote green automotive technology, according to local media.

But the deal "will have no legal bearing on proceedings outside the United States," Volkswagen said. The company continues to face a criminal probe in the United States and litigation abroad.