A former senior manager at Volkswagen has been arrested in Germany in connection with the emissions scandal, Sueddeutsche Zeitung newspaper reported Friday.
Wolfgang Hatz, former head of research and development at Volkswagen luxury brand Porsche, was taken into custody on Thursday following investigations by Munich state prosecutors.
Hatz was suspended from his role in the wake of revelations surrounding emissions cheating practices at Volkswagen, and subsequently left the company.
Prior to his last position at Porsche, he was responsible for powertrain development at the Audi and Volkswagen brands. At the time of his departure, Porsche said he had assisted with internal investigations and left the firm voluntarily. There was no indication of Hatz's complicity in illicit practices.
The former manager is the second automotive industry representative to be taken into police custody in Germany after an engineer from Audi's motor development unit was arrested in July. The U.S. Department of Justice has filed an extradition request for the Audi engineer, who has since been fired and is now trying to sue his former employer.
State prosecutors further confirmed on Thursday that investigators had conducted searches in two unspecified locations and widened the number of suspects under scrutiny.
Former or acting Audi board members are not being investigated, a spokesperson said. However, the Munich public prosecution office is still assessing whether penalties can be imposed on board members for failing to assume their supervisory duties.
Audi faces hefty fines should it be found guilty of misconduct.
Audi's mother corporation Volkswagen revealed on Friday that the firm would have to put aside a further 2.5 billion euros (2.95 billion U.S. dollars) to deal with the fallout of the "dieselgate" scandal, with the total anticipated cost rising to 25.1 billion euros.
Retro-fitting and re-call operations of affected diesel vehicles with two-liter motor types in the United States were proving "considerably lengthier and technically more complicated" than previously approved. As a consequence, Volkswagen is expecting high profit losses in the third quarter of 2017.
Volkswagen stocks fell by as much as 4 percent on Friday as traders reacted to the news. (1 euro = 1.18 U.S. dollars)