UPDATE 1-Volkswagen diesel settlement talks with German consumer groups fail

(Adds VZBV confirmation)

BERLIN, Feb 14 (Reuters) - Volkswagen said talks with consumer groups who were seeking compensation over excessive pollution caused by VW’s diesel cars had failed.

In 2015 the carmaker admitted to using manipulated engine management software to mask excessive pollution levels in its diesel cars, sparking a raft of prosecutions and lawsuits.

A VW spokesman confirmed that talks had collapsed, blaming excessive demands for fees by lawyers representing the Federation Of German Consumer Organisations (VZBV). The Funke newspaper group was first to report that the talks had failed.

VW said it had struck a preliminary deal offering 830 million euros ($899.64 million) in compensation but that VZBV’s lawyers had insisted on 50 million euros in fees.

A spokesman for German consumer organisation VZBV confirmed the settlement talks had failed. ($1 = 0.9226 euros) (Reporting by Riham Alkousaa, Ilona Wissenbach and Klaus Lauer Editing by Michelle Martin)