Audi’s chief executive has become one of the most high-profile executives to be arrested in connection with Volkswagen's “dieselgate” scandal.
Rupert Stadler, who has led the Volkswagen Group-owned premium car marque since 2007, had his home raided earlier this month by prosecutors in Munich.
He has been charged with fraud and the falsification of documents which allowed VW to fit so-called “defeat devices” to help diesel cars beat emissions controls.
In 2015 VW - which also owns Porsche, Seat and Skoda - admitted cars were equipped with software that identified when emissions were being checked under test conditions and turned on pollution controls that were not employed in normal driving.
The system - installed in 11 million VW cars globally - meant that vehicles pumped out far higher levels of pollution on the roads compared with testing procedures under laboratory conditions.
German prosecutors said the arrest of Mr Stadler - who has been a member of VW’s main board since 2010 - was justified because of the “risk of concealment of evidence”.
Audi confirmed the arrest but gave no further details. In a statement, the car maker said: "For Mr Stadler, the presumption of innocence continues to apply."
Days after VW’s deception emerged in September 2015, chief executive Martin Winterkorn resigned, saying he did not know about the scandal.
Last month Mr Winterkorn was indicted by US prosecutors, alleging he was aware of the company's tactics to beat emissions controls as early as May 2014 but decided to allow them to continue, something he denies.
He was replaced by Porsche boss Matthias Mueller, who led the company through the crisis and managed to steer it to record sales. He also oversaw VW agreeing to a settlement that saw the company pay $25bn in fines, penalties and compensation in the US to authorities and affected drivers.
Mr Mueller himself was replaced in April by Herbert Diess, who joined VW from BMW just months before the emissions scandal broke.
He was seen as the most likely successor to Mr Winterkorn but plans to change VW’s leadership were knocked off course by dieselgate.
Last week VW agreed a €1bn fine with German prosecutors. This involved the company saying it “accepted responsibility” for the emissions scandal, and that the “administrative penalty [means] active regulatory offence proceedings conducted against [the company] will be finally terminated”.
The deal in Germany may end criminal cases against the company over its use of defeat devices, but the company still faces a wave of civil cases from drivers and investors who claims they lost out because of the scandal.