Volkswagen Group has launched a diesel scrappage scheme for all of its brands in Germany, as the carmaker seeks to protect market share in the face of fuel ban threats from the country’s local authorities.

In what is becoming a more frequent exercise on part of carmakers to sustain slowing retail volumes, scrappage incentives will be offered on Euro 1 to Euro 4 vehicles.

Additionally, drivers in the 14 cities classified as “most polluted” by Germany’s federal government will receive a premium on top of residual value when trading in a Euro 4 or Euro 5 vehicle. The specific premium amount will be determined by each brand division within the VW group.

The offers are aimed at both retail and fleet customers. For some of the group’s brands, nearly-new vehicles will also be eligible for both sets of incentives.

A spokesman for Volkswagen Group in Germany told Motor Finance it was “not likely” that the scheme would be extended to other markets such as the UK, as it was aimed at Germany’s specific situation around fuel restrictions.

“Volkswagen believes in the diesel. Independent studies indicate that our current models rank among the cleanest on the market when it comes to NOx emissions,” said Jürgen Stackmann, board member for sales.

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He added: “Fuel-efficient diesel engines continue to make an important contribution in the fight against climate change. The diesel swapping program we have launched today specifically seeks to reinforce the confidence of German customers in this technology and offer them individual mobility by preventing driving bans.”

Volkswagen has been hard at work trying to sustain its passenger cars business after the Dieselgate scandal, which has cost the group billions in fines and compensations, and saw executives prosecuted on both sides of the Atlantic.

The Wolfsburg giant has been repairing vehicles affected by dieselgate free of charge, and in April rolled out a “diesel guarantee” for customers in Germany after the country’s top federal court ruled local authorities were free to impose restrictions on certain vehicles to abate pollution.

Analysts at Moody’s said the federal court’s decision in February could lead to a “pronounced fall-off” in vehicle’s residual values, and that customers’ wariness of “even the latest generation of diesel cars” would require “close monitoring” by carmakers’ captive finance units.

The analysts also drew parallels with the UK, which together with Germany it called a country “of particular concern”, due to the threat to residual values in a market with high lease penetration.

The Volkswagen brand is now betting on its ID family of electric and connected vehicles for its future, and this week revealed plans to set electric vehicles quotas for dealers in its revamped franchise network.