WASHINGTON -- Volkswagen Group and Robert Bosch have agreed to pay at least $1.6 billion to fix or buy back and compensate owners of VW, Audi and Porsche cars diesel engines rigged to cheat pollution tests.
The settlement is the last major hurdle to Volkswagen moving beyond its emissions scandal, though it still faces suits from some U.S. states and investors.
Volkswagen Group of America CEO Hinrich Woebcken said the agreement means all owners of polluting diesels "will have a resolution available to them. We will continue to work to earn back the trust of all our stakeholders."
VW's settlement covers 78,000 VW Touareg, Porsche Cayenne and Audi Q7, A6, A7 and A8 vehicles with V-6, 3.0-liter diesels for model years 2009 through 2016. Bosch's settlement covers 3.0-liter and 2.0-liter engines.
The proposed settlement was filed late Tuesday in the District Court in San Francisco and must be approved by a judge. A federal judge in San Francisco will hold a hearing on Feb. 14.
Owners of 3.0-liter vehicles who opt for fixes will get compensation of between $7,000 and $16,000 from VW if emissions fixes are approved in a timely fashion -- and the automaker will pay another $500 if the fix affects a vehicle's performance. Owners who opt for a buyback will get $7,500 on top of the value of the vehicle.
The settlement documents show that if regulators do not approve a fix for all of the vehicles, VW's costs could jump dramatically. The automaker could be forced to pay as much as $4.04 billion -- and much more in individual owner compensation -- if regulators reject a fix entirely, according to the U.S. Federal Trade Commission, which had sued VW and voted unanimously to back the deal.
The carmaker has agreed to repurchase the 2009-2012 Volkswagen and Audi 3.0-liter vehicles, but believes it will be able to fix the 2013 to 2016 Volkswagen, Audi, and Porsche 3.0-liter vehicles.
VW has been barred from selling diesels in the U.S. since late 2015.
Separately, Bosch agreed to pay $327.5 million to compensate owners of polluting U.S. vehicles with rigged 3.0-liter and 2.0-liter diesel engines.
Bosch, the world’s largest car-parts maker, supplied control software for the diesel engines at the heart of the cheating scandal. Diesel car owners sued Bosch in 2015 claiming the company helped to design "defeat device" software that allowed VW to evade emissions rules. They alleged Bosch was a "knowing and active participant" in VW's decade-long scheme.
Under the agreement, Bosch will pay $163.3 million to address 2.0-liter vehicle claims, with most owners getting $350 each, while 3.0-liter owners will split $113.3 million. Most 3.0-liter owners will receive $1,500 from Bosch.
Bosch said in a statement that it didn't admit wrongdoing or accept liability but had decided to settle so it could focus on an extensive "transformation process" the company has embarked on.
Bosch also supplied technology for Fiat Chrysler Automobiles vehicles that are subject to a separate U.S. probe into possible emissions-standards violations.
The supplier said last month that it will disclose provisions in May for costs related to its involvement in the scandal.
VW earlier agreed to pay $225 million to offset the excess pollution from the 3.0-liter vehicles, on top of $2.7 billion it agreed to pay to offset 2.0-liter pollution. The automaker is set to plead guilty on Feb. 24 in Detroit to three felony counts as part of a plea agreement with the U.S. Justice Department to resolve the government's excess diesel emissions investigation.
The Justice Department charged VW with conspiring for nearly 10 years to cheat on diesel emissions tests. The automaker agreed to pay $4.3 billion in U.S. civil and criminal fines. It has also charged seven current and former VW executives with wrongdoing.
Under the settlement of charges, VW admitted to installing secret software in U.S. vehicles to allow them to emit up to 40 times the amount of legally permitted pollution.
In total, VW has now agreed to spend up to $25 billion in the U.S. to address claims from owners, environmental regulators, U.S. states and dealers, and offered to buy back about 500,000 polluting vehicles.
The lead lawyer for the vehicle owners, Elizabeth Cabraser, said in a statement the settlement provides "substantial benefits to both consumers and the environment."
Reuters and Bloomberg contributed to this report