Volkswagen has agreed to pay at least $1.26 billion to fix or buy back and compensate US owners of about 80,000 3.0 litre diesel-engined vehicles.
The company could be forced to pay more than $4 billion if regulators do not approve fixes for all vehicles, court documents filed last night show.
In December, VW said it had agreed to buy back 20,000 vehicles and expected to fix another 60,000.
The settlement documents show that if regulators do not approve a fix for all of the vehicles, the German car maker's costs could jump.
The settlement shows owners of 3 litre vehicles who opt for fixes will get compensation of between $7,000 and $16,000 from Volkswagen.
The company will pay another $500 if the fix impacts a vehicle's performance. Owners who opt for a buyback will get $7,500 on top of the value of the vehicle.
Separately, German auto supplier Robert Bosch has agreed to pay $327.5m to compensate owners of polluting US vehicles.
VW previously agreed to spend up to $10.03 billion to buy back up to 475,000 2 litre vehicles after it admitted it installed secret software to evade emissions controls.
Under the agreement, Bosch will pay $163.3m to address 2 litre vehicle claims, with most owners getting $350 each, while 3 litre owners will split $113.3m. Most of these car owners will receive $1,500 from Bosch.
