Martin Winterkorn, the chief executive of Volkswagen, has resigned just days after it emerged that the company had cheated emissions tests in the US.
It came on the same day that it emerged that the scandal could spread to other carmakers and models.
Skoda and Seat models in the UK were also fitted with the EA189 engine VW used to cheat US emissions tests.
The engines contained software that could switch to a higher calibration and block more nitrous oxide from being released during tests, so that vehicles complied with US environmental laws. When the car was not being tested it emitted illegal amounts of noxious gas that can cause ozone depletion and respiratory problems.
VW has recalled more than 500,000 cars in the US but may extend this review to cover luxury models, including the Porsche Cayenne SUV and the Audi Q5, A6, A7 and A8 models.
The scandal could also spread geographically: the UK, France, Australia, and South Korea are among the countries where investigations are underway.
Some analysts have said that even if Volkswagen survives, diesel fuelled cars might not. Richard Gane, director and automotive sector specialist at supply chain firm, Vendigital, said the scandal is likely to lead to a sharp fall in demand for diesel engine cars.
"In Europe the impact could be much more significant, leading to a large tranche of the market switching to petrol engine cars virtually overnight," Gane said.