Rupert Stadler, CEO of German auto producer Audi, briefs the media during the annual press conference in Ingolstadt, Germany. The prosecutors' office last week widened its emissions cheating probe into Volkswagen's luxury brand Audi to include Stadler among the suspects accused of fraud and false advertising.
Audi's parent company, the Volkswagen Group, has confirmed via a spokesperson that Stadler was arrested this morning.
"The principle of the presumption of innocence continues to apply to Stadler", he added.
The emissions scandal first emerged in 2015. Volkswagen's supervisory board is meeting today, where Stadler's future will be among the topics of discussion.
Cars sold in Europe by Volkswagen group were believed to be equipped with a software that automatically turned off emissions controls during driving, flouting several pollution control laws.
The emissions scandal dates back to September 2015 when VW admitted using illegal software to cheat United States emissions tests on diesel engines.
The fallout has cost VW more than $30bn to date - the bulk of that sum in the United States where, in May, prosecutors filed criminal charges against former VW boss Martin Winterkorn. They are also investigating Winterkorn and 48 others.
Volkswagen declined 2.2 percent to 157.88 euros and traded 2 percent lower at 11:50 a.m.in local trading, extending losses this year to 5.2 percent.
Former VW executive Oliver Schmidt is serving a seven-year sentence after pleading guilty to conspiracy to commit fraud and violating the US Clean Air Act.