Automakers agree to clean up diesels to avoid ban in German cities

The costs of the rescue plan amount to under 2 billion ($2.33 billion) euros for cars in Germany, with the auto industry agreeing to shoulder the expense of about 100 euros per car, the sources said.

After Volkswagen Group confessed to emissions-test cheating in 2015, the entire auto industry has come under scrutiny for producing nitrogen oxide emissions in diesel cars, which are blamed for causing respiratory disease.

Audi, a division of Volkswagen Group, said it would update engine software on up to 850,000 diesel cars. The refit of six and eight cylinder engines will be free of charge for all customers, Audi said. The service will also be offered to Porsche- and Volkswagen- branded cars using the same six- and eight-cylinder engines, Audi said.

Earlier this week, Porsche's CEO was quoted as saying the brand may abandon diesel engines as its electric cars go to market, and Mercedes announced a plan similar to Audi's, in which it will recall 3 million diesel cars in Germany for a $255 million engine software fix.

Diesel cars from all domestic and foreign car brands that conform to the latest emissions standards, Euro-6 and Euro-5, will be updated, the sources said. The plan is set to be presented at the beginning of August.

With the software updates, the auto industry is able to cut nitrogen oxide pollution by about 20 percent, the sources said.

A committee will be set up to measure the impact of updating diesel cars on individual communities and cities, with a view to averting bans of diesel cars, the sources said.

Auto industry executives and German Transport Minister Alexander Dobrindt are due to discuss diesel pollution at a summit on Aug. 2.