Volkswagen may offer VW owners in Germany discounts on new cars if they turn in certain old models affected by the emissions scandal that has rocked Europe's biggest carmaker, German news agency DPA reported on Sunday. Volkswagen is battling the biggest business crisis in its 78-year history after admitting last month it installed software in diesel vehicles to deceive U.S. regulators about the true level of their toxic emissions. The group now expects the costs of the scandal, which include a recall of 8.5 million vehicles in Europe, to exceed 30 billion euros ($33 billion), German monthly Manager Magazin reported on Saturday. It is seeking ways to cut costs and stabilise sales to cope with the fallout of the scandal.

Incentives for VW owners to buy new vehicles could help buoy sales figures and take pressure off VW dealerships to implement fixes quickly. The special offers may focus on the owners of vehicles with 1.6-litre diesel engines, which require costly hardware upgrades rather than just software fixes, sources at Volkswagen and VW dealerships said, according to DPA. The offer would be available only in Germany, where around 2.4 million cars with the cheating software were sold.