Volkswagen shares jumped more than 6 percent in early trade on expectations that the carmaker was close to reaching a deal to buy back 500,000 diesel cars in the United States in a step toward resolving an emissions rigging scandal. Sonia Legg reports
The beginning of the end - that's the way investors see the framework deal reached by Volkswagen and U.S. officials. Shares shot up more than six percent after sources told Reuters the automaker would offer to buyback almost half a million diesel cars that used software to evade emissions rules (SOUNDBITE) (English) ETX CAPITAL HEAD OF TRADING, JOE RUNDLE, SAYING: "Although the numbers are big at least it is not plucking numbers out of the air so any number they can start to build on and implement some sort of financial planning and investment for shareholders is good." VW admitted cheating on emission tests in September last year - 11 million vehicles worldwide were implicated. It's thought the buyback will cover 2-litre models like the Jetta sedan, the Golf compact and the Audi A3 - not bigger 3-litre vehicles. But the settlement could include a $1bln owners compensation fund. An environment remediation fund And an opportunity for owners to have their polluting vehicle repaired. It seems like a comprehensive settlement - but it's not the end of the road. (SOUNDBITE) (English) ETX CAPITAL HEAD OF TRADING, JOE RUNDLE, SAYING: "There's going to be a lot of court cases. We saw with the BP spill it just went on for years and years and it tarnished their brand so I expect VW to suffer a lot for this." Secretly VW may also take comfort from Mitsubishi's new emissions confession - showing it wasn't the only carmaker up to no good.