Volkswagen may be preparing to buy back around as many as 100,000 cars in the US market, according to a German newspaper report.

Sueddeutsche Zeitung said the company expected it would have to either refund the purchase price of up to a fifth of the 500,000 2.0-litre diesel vehicles affected or offer a new car at a significant discount.

The report said that Volkswagen expects that the rest of the vehicles will need major refits, incurring significant costs for parts.

VW managers have concluded that fixing older VW cars equipped with 2.0-litre diesel engines would be more difficult than bringing more recent models into compliance and some regulators say that VW may have to buy back older models.