Volkswagen brand chief confident of finding solution to U.S. diesel issues

(Reuters) - The head of Volkswagen AG's top-selling brand said on Tuesday he is confident the German automaker will reach agreement with U.S regulators to bring nearly 500,000 diesel vehicles into compliance with U.S. emissions laws. "We are confident we will find an acceptable solution," VW brand chief Herbert Diess said at a press conference at the Consumer Electronics Show in Las Vegas, Nevada. In an interview with Reuters, Diess said fixing older VW cars equipped with 2.0-liter diesel engines will be more difficult than bringing more recent models into compliance. "The intrusion into the car will be quite significant," Diess said of the older models. Some U.S. regulators and lawmakers have said VW may have to buy back older models. Diess did not say whether VW is discussing that, but said he is optimistic an agreement with U.S. regulators will be reached soon. "It's a very constructive dialogue," he said. The U.S. Environmental Protection Agency said Wednesday that "recall discussions with the company have not produced an acceptable way forward. EPA continues to insist that VW develops effective, appropriate remedies as expeditiously as possible." The U.S. Justice Department on Monday sued Volkswagen for up to $48 billion for allegedly violating U.S. environmental laws. Diesel technology will still play an important role in VW's future products, Diess said. "Diesel still has a future in some segments," including in sport utility vehicles, "and in some markets it will be a must," he said. Europe will still be a major diesel market in the next decade, Diess said. Volkswagen has admitted it installed software in certain diesel models sold in the United States, that allowed the cars to pass government emissions tests, but then emit nearly 40 times the allowed levels of pollutants on the road. Diess said Volkswagen expects the company will be able to repair by the end of 2016 about 8.5 million diesel cars sold in Europe that do not comply with emissions standards. Separately, Diess announced a new partnership with Mobileye, an Israeli machine vision company that is a leader in camera technology used in advanced safety features such as automatic braking or lane departure warning. Mobileye's camera systems will beef up the mapping systems VW cars will use to enable autonomous driving, Diess said. Diess showed off VW's concept for an electric, highly connected microbus, called the Budd-e, which he said could be brought to market by 2020. (Reporting by Joe White in Detroit and David Shepardson in Washington; Editing by Sunil Nair, Muralikumar Anantharaman and Bill Rigby)