German prosecutors are demanding Volkswagen face a fine based on the level of the profits the carmaker made from selling 11m vehicles equipped with manipulated engine software, newspaper Sueddeutsche Zeitung said.

Prosecutors in Braunschweig, Germany, are assessing the "economic advantage" Volkswagen enjoyed from using cheating software rather than expensive exhaust filter systems, to manipulate pollution tests, Sueddeutsche Zeitung said, according to Reuters.

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The automaker has set aside US$15bn in the US  – US$10bn for buybacks and US$5bn to offset excess diesel emissions and invest in electrification and cleaner tech. Of approximately 499,000 two-litre TDI vehicles produced for sale in the United States, approximately 460,000 Volkswagen and 15,000 Audi vehicles are currently in use and eligible for buybacks and lease terminations or emissions modifications, if approved by regulators.

European industry commissioner Elzbieta Bienkowska has said VW should pay its German customers similar compensation to US buyers.

She told Welt am Sonntag newspaper: "Volkswagen should voluntarily pay European car owners compensation that is comparable with that which they will pay US consumers."