Thomson Reuters
A Volkswagen Golf car is loaded in a delivery tower at the plant of German carmaker in Wolfsburg
As part of the deal, Volkswagen agreed to make cash payments and "other financial benefits" to dealers in order to resolve any alleged past and future claims of loss in franchise value.
"We believe this agreement in principle with Volkswagen dealers is a very important step in our commitment to making things right for all our stakeholders in the United States," Volkswagen North American Region CEO Hinrich J. Woebcken said in a statement.
"Our dealers are our partners and we value their ongoing loyalty and passion for the Volkswagen brand. This agreement, when finalized, will strengthen the foundation for our future together and further emphasize our commitment both to our partners and the U.S. market," Woebcken said.
According to VW, details of the agreement will be finalized at the end of September. The deal is in response to a federal lawsuit filed by the dealers in April.
US Environmental Protection Agency revealed in September of 2015 that half a million cars powered by Volkswagen's 2-liter TDI turbo-diesel four-cylinder engines features software that detects when the car is undergoing emissions testing and turns on a suite of pollution-control systems.
But as soon as the test ends, the controls switch off, leaving the engine free to emit up to 40 times the legal limit of nitrogen oxide, a highly polluting gas. According to the California Air Resources Board, Volkswagen admitted to using a defeat device during a September 3, 2015 meeting with the agency and the EPA.
That month, the California Air Resources Board and the EPA both issued notices of violation to Volkswagen Group concerning nearly 500,000 2.0-liter TDI diesel-powered vehicles sold in the US from 2009 and 2015.
The scandal eventually spread around the world - affecting more than 11 million cars. The scandal - dubbed "dieselgate"- led to the dismissal of VW CEO Martin Winterkorn, as well as several high-ranking engineers.