A study published Friday said that pollution from 2.6 million VW cars sold between 2008 and 2015 and rigged to appear eco-friendly will cause 1,200 premature deaths in Europe.
Here is an overview of how the scandal unfolded and of the fallout for the German auto giant:
- How the scandal started -
On September 18, 2015, the US Environmental Protection Agency (EPA) revealed that VW had violated clean air regulations by using so-called defeat devices in hundreds of thousands of 2.0-litre engines in the US since 2009.
The software, used in the Volkswagen, Porsche, Audi (IOB: 0FG8.IL - news) , Seat and Skoda brands, helped to make the cars seem compliant with exhaust pollution standards when in fact their emissions were excessive.
Four days later the company admitted that some 11 million diesel vehicles worldwide, including 8.5 million in Europe, had been fitted with the software.
The revelation sent its shares plunging by 40 percent in two days.
- How Volkswagen reacted -
On September 23 chief executive Martin Winterkorn stepped down but insisted he knew nothing of the scam. He was replaced by Porsche chief Matthias Mueller.
As part of its efforts to turn the page on the crisis, the firm suspended some staff and recalled vehicles equipped with the cheating software.
In January 2016 the group pleaded guilty to fraud in the United States, agreeing to pay out more than $22 billion (20.8 billion euros) in compensation.
- Consequences for VW -
VW announced a net loss of nearly 1.6 billion euros in 2015, its first in 20 years, after setting aside billions to cover the anticipated costs of the scandal.
But it came back into the black in 2016, with net profits of 5.1 billion euros.
The company has settled most claims in the United States, but is still not out of the legal woods.
It has made provision for 22.6 billion euros in its accounts since the start to meet the legal costs of the affair.
Some experts, however, estimate that the affair will cost the company 25-35 billion euros.
Despite its dented image, in 2016 VW overtook Japan's Toyota to become the world's top-selling automaker, with sales of 10.3 million vehicles. It has set the aim of becoming the leader in electric cars by 2025.
- Consequences for customers and health -
In the United States, where anti-pollution standards are tougher, the group has agreed to pay some $16 billion to repair or buy back around 600,000 affected cars, and to pay their owners compensation of up to $16,000 each.
In Europe, Volkswagen has no plans at the moment to compensate customers, an approach that has caused the European Commission to voice dissatisfaction.
Most of the recalls are in Europe, with more than two million in Germany and around 900,000 in France.
According to figures published in late February the company has retrofitted 3.4 million vehicles, including 1.4 million in Germany.
The statistical analysis published on Friday in Environmental Research Letters journal, said Germany will account for about 500 out of 1,200 lives expected to be lost prematurely in Europe due to the cheating.
Poland is in second place with 160 deaths, followed by France with 84, the Czech Republic with 72, Italy 55, Austria 47, Switzerland 40, Hungary 32, Britain 30 and Romania 27.