A US judge on Thursday gave Volkswagen until April 21 to come up with a plan to fix some 600,000 cars spewing illegal levels of pollutants due to emissions-cheating software.
"This issue of what is to be done with these cars must be done by that date," US District Court Judge Charles Breyer told attorneys of the German automaker during a status hearing.
If a concrete plan for getting the cars fixed or off the roads is not submitted by the deadline, "the court would seriously consider whether to hold a bench trial this summer so that the polluting cars can be addressed forthwith," Breyer said.
VW, which until recently had ambitions to become the world's biggest carmaker, is battling to resolve its deepest-ever crisis prompted by revelations that it installed emissions-cheating software in 11 million diesel engines worldwide.
The software, known as a "defeat device," limits the output of toxic nitrogen oxides to US legal limits during emissions test by regulators.
But when the vehicles are in actual use, the software allows them to spew poisonous gases at up to 40 times the permitted levels, giving the cars better acceleration and fuel economy.
Defeat devices are prohibited in the United States -- where the VW scam was originally exposed -- as well as in other countries.
- Slew of lawsuits -
On top of still-unquantifiable regulatory fines in a range of countries, VW is facing a slew of lawsuits from angry car owners -- notably in the United States and Germany -- and from shareholders seeking damages for the massive loss in the value of their stocks since September.
US cases have been consolidated under Judge Breyer, who said attorneys representing all involved have been working relentlessly for the past month on a way to "get the cars, in their current condition, off the road."
However, engineering technicalities and "other important issues" had yet to be resolved, he added.
Possible solutions include a buy-back plan and a fix to the emissions system.
In any case, a specific and detailed plan including timing, cars involved, and payments to consumers should be finalized by the April 21 deadline to avoid a trial, according to the judge.
Breyer instructed attorneys not to reveal anything about the status talks, contending that confidentiality is critical to success.
"We are working around the clock," lead plaintiffs' attorney Elizabeth Cabraser told AFP as she left the courtroom.
"We will sleep when they are fixed."
Volkswagen said in a statement that it is "committed to resolving the US regulatory investigation into the diesel emissions matter as quickly as possible and to implementing a solution for affected vehicles."
"We continue to make progress and are cooperating fully with the efforts undertaken by Judge Breyer... to bring about a prompt and fair resolution of the US civil litigation."
Volkswagen engineers and lawyers are working non-stop to resolve the problem and settle the case, VW lead attorney Robert Giuffra assured Breyer.
A bench trial in the case would give Breyer the power to order a solution, possibly including a mandate to give Volkswagen car buyers refunds, because no jury would be involved.
Any fix to vehicles must put them in compliance with environmental regulations.
- Emissions fallout -
Volkswagen's straight-talking US chief Michael Horn quit the automaker earlier this month as it struggled with the fallout from its massive pollution cheating scandal. His decision caught the industry by surprise.
The 54-year-old car executive made headlines worldwide in September 2015 with his frank admission that VW had "totally screwed up."
He left by mutual consent "to pursue other opportunities," the company said.
The highest-ranking US executive to have quit the firm since the emissions scandal broke, Horn became the German carmaker's public face during the crisis.
German prosecutors this month said they had broadened their investigation into the cheating from six to 17 suspects at Volkswagen.
French prosecutors said they, too, have opened an investigation into "serious fraud" at the automobile manufacturer.
Volkswagen's former chief executive Martin Winterkorn resigned shortly after the scandal broke, protesting his innocence. He was replaced by Matthias Mueller, head of the group's luxury sports car brand Porsche.
Volkswagen has since revealed that Winterkorn received a memo in May 2014 highlighting some of the diesel engine irregularities that have since come to light.
A former Volkswagen employee recently filed a whistleblower lawsuit accusing the German automaker's US unit of deleting data to cover up emissions cheating in its diesel cars.