A California judge also gave final approval to auto supplier Robert Bosch's settlement over its role in developing the engines. VW is to fix or buy back 80,000 vehicles, which could total up to US $4 billion in payouts.
US District Judge Charles Breyer gave final approval to the VW plan to pay at least $1.22 billion (1.12 billion euros) to owners of the 80,000 3-liter vehicles in the US linked to the diesel emissions cheating scandal.
Breyer called the settlements "fair, reasonable and adequate." The agreement ends most of the litigation over VW's cheating scandal, which became public in 2015.
Owners of 3-liter models from 2009-2012 in the US will be offered a correction to their cars so they meet pollution standards. If the vehicles can not be fixed then they will be offered buybacks. Owners will also get compensation on a range of $7,755 to $13,880.
Owners of newer models will be compensated on a range from $7,039 to $16,114. If their cars can not be fixed to meet standards, then their lawyers can return to court to apply for buybacks. This could take the cost of the settlement up to $4 billion (3.7 billion euro).
Last year Breyer approved a separate settlement for VW to buy back 475,000 2-liter vehicles that emitted up to 40 times the legally allowable emissions. This deal could cost VW up to $14.7 billion.
Thursday's settlement brings VW's spend on settling claims from owners, environmental regulators, US states and dealers to $25 billion.
"These agreements accomplish our goal of making the consumers harmed by Volkswagen's emissions deception whole, while repairing or removing illegally polluting vehicles from our roads," Elizabeth Cabraser, the plaintiffs' lead attorney, said on Thursday.
Last month VW was sentenced to three years probation after pleading guilty to three felony counts on emission test cheating. During that time, VW must test all its US vehicles with a portable system designed to capture real world emissions and to deter cheating.
A $327.5 million settlement with Bosch, which supplied the software in the cheating engines, was also given approval by the judge on Thursday.
Under the terms of the separate deal, 3-liter diesel owners are to be paid up to $1,500 in compensation, while 2-liter owners will receive $350.
Volkswagen was the best-selling automaker worldwide in 2016.
jm/kl (Reuters, AP)