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Photograph: Photo by Bruno Kussler Marques, used under CC BY

Volkswagen has reached a settlement with US government authorities after months of negotiations over larger diesel engines involved in the company's emissions cheating scandal, the California judge overseeing the case said Tuesday.

US District Judge Charles Breyer in San Francisco said the German carmaker had agreed to buy back about 20,000 of some 80,000 cars with 3-litre engines equipped with software designed to trick emissions tests.

The rest of the cars, sold under the Volkswagen, Audi and Porsche brands, are to have the software corrected through a recall process. If the repairs fail to fix the problem, the cars must likewise be bought back by VW, Breyer said during a Tuesday hearing in the case.

The outlines of an agreement with lawyers for car owners were likewise in place, Breyer said.

Details of the agreement with customers were not revealed, pending another court hearing Thursday. Breyer said that "substantial" compensation payments would be made to owners.

Parts supplier Bosch, a co-defendant in the United States with VW, has likewise reached a basic agreement with the US plaintiffs, but Breyer gave no details.

Volkswagen reached a deal in mid-2016 in a similar case over 475,000 cars with 2-litre engines. That agreement could cost VW 16.5 billion dollars.

Since admitting the emissions cheating in September 2015, Europe's largest carmaker has been in talks with customers and governments over compensation and damages for the software, which was installed on 11 million cars worldwide.

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Final decision on VW settlement expected within week

VW sets aside billions to cover scandal costs

VW, US reach settlement in emissions case

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