WASHINGTON (Reuters) - U.S. District Judge Charles Breyer on Monday granted final approval to Volkswagen AG's (VOWG_p.DE) settlement worth up to $1.21 billion with 652 U.S. dealers over its diesel emissions scandal.

VW's dealers will receive an average of $1.85 million each over 18 months under the settlement. VW also agreed to keep making volume-based incentive payments to dealers, and will allow them to defer capital improvements for two years. In total, VW has now agreed to spend up to $22 billion in the United States to address claims from owners, environmental regulators, U.S. states and dealers stemming from the excess vehicle emissions.

(Reporting by David Shepardson; Editing by Jonathan Oatis)