Following hearings of VW car owners and lawyers on Tuesday, US District Judge Charles Breyer said he was "strongly inclined" to approve VW's compensation scheme, but added that he would issue a final decision in the matter by October 25.

In a deal struck in July, VW agreed to spend up to $10 billion (9 billion euros) buying back or repairing about 475,000 Volkswagens and Audi vehicles with 2-liter diesel engines and paying their owners an additional $5,100 to $10,000 each.

The settlement also includes $2.7 billion for unspecified environmental mitigation and an additional $2 billion to promote zero-emissions vehicles.

The deal does not cover about 85,000 more-powerful Volkswagens and Audis with 3-liter engines also caught up in the emissions scandal.

Volkswagen has acknowledged that the cars were programmed to turn on emissions controls during government lab tests and turn them off while on the road. Investigators found that the cars emitted more than 40 times the legal limit of nitrogen oxide, which can cause respiratory problems.

Widespread approval

US customers who bought Volkswagen diesel carsequipped with the software have overwhelmingly accepted a settlement offered by the German automaker.

Robert Giuffra, a lawyer for VW, said more than 339,000 owners of the cars had registered to accept the deal. Less than one percent of the VW owners affected had refused it, but had until 2018 to make a finally decision, he added.

In the court, those opposed to the settlement argued that VW was failing to offer enough money for buybacks or refunding for other out-of-pocket costs like extended warranties, maintenance and government licensing fees.

Breyer also on Tuesday granted preliminary approval during the three-hour hearing to a $1.21 billion settlement with VW's US brand dealers, and stressed the urgency of the German carmaker reaching an agreement with regulators on the 3-liter diesel cars.

uhe/nz (Reuters, dpa)