Volkswagen agreed on Friday to pay up to $1.2 billion to its 652 United States brand dealers as part of a $16.5 billion diesel emissions settlement. Dealers will receive an average payment of $1.85 million each over 18 months following an emissions scandal in which nearly 600,000 diesel engine vehicles had illegal devices installed that caused emissions to exceed EPA's standards, resulting in harmful air pollution. Photo by UPI/Brian Kersey | License Photo

WASHINGTON, Oct. 1 (UPI) -- Volkswagen confirmed it has agreed to pay up to $1.2 billion to its 652 U.S. brand dealers as part of a $16.5 billion diesel emissions settlement.

Filings on Friday in U.S. District Court in San Francisco stated that dealers will receive an average payment of $1.85 million each over 18 months the Wall Street Journal reported.


Dealers were forced to hold inventory following an emissions scandal in which nearly 600,000 diesel engine vehicles had illegal devices installed that caused emissions to exceed the U.S Environmental Protection Agency's standards, resulting in harmful air pollution.

The scandal forced Volkswagen to stop sales of diesel-powered vehicles in the U.S. in 2015.

A filing by lawyers for company dealers said Volkswagen also won't sell any U.S. diesel vehicles for the 2016 and 2017 model years. The company said it was unsure if diesel vehicles would be sold in the U.S. ever again, according to Automotive News.

As part of a settlement with brand dealers, still awaiting a federal judge's approval, Volkswagen will continue making some incentive payments to dealers, buy back diesel vehicles that dealers can't sell and suspend capital improvements for two years that it wanted dealers to make.

The Justice Department, Federal Trade Commission and lawyers for more than 311,000 eligible owners of 475,000 polluting diesel vehicles also made a separate court filing on to take advantage of the terms in a $10 billion settlement.

The settlement, which could come as soon as a scheduled Oct. 18 hearing, offers consumers a choice of selling back their diesel-engine vehicle, or having it modified to reduce emission levels as well as additional compensation along with either choice.

A method of modifying the vehicles has not yet been determined but the Justice Department said in a court filing regulators are still working on "a technical solution that reduces the emissions of these vehicles."