Sales of Volkswagen cars in the US dropped around 12 per cent and the car maker was desperate to push sales to around 1 million cars in next three years.
German carmaker Volkswagen is facing the biggest test of time after the US authorities accused that is falsified emissions data.
The US Environmental Protection Agency said on Friday Europe's biggest carmaker used software for diesel VW and Audi branded cars that deceived regulators measuring toxic emissions and could face up to $18 billion in penalties.
During normal driving, the cars with the software -- known as a ‘defeat device’ -- would pollute 10 times to 40 times the legal limits, the EPA said.
The discrepancy surfaced after the International Council on clean transportation commissioned emissions tests of diesel vehicles, then compared them to lab results.
Volkswagen had counted on its popular diesel cars to enhance sales in the US, where it encountered a steep fall in demand.
Sales of VW cars in the country dropped around 12 per cent and the car maker was desperate to push sales to around 1 million cars in next three years.
Meanwhile, the scandal has emerged just as VW was hoping to move on from a damaging leadership battle, with a supervisory board meeting on Friday due to discuss a new company structure and management line-up.
It is learnt that chief executive Martin Winterkorn, said that he was ‘deeply sorry’ for the breach of US rules and ordered an external investigation, should quit.
"This disaster is beyond all expectations," said Ferdinand Dudenhoeffer, head of the Center of Automotive Research at the University of Duisburg-Essen.
Winterkorn, who recently saw off a challenge to his authority with the ousting of long-time chairman Ferdinand Piech, ran the VW brand between 2007 and 2015, including the six-year period when some of its models were found violating US clean air rules.
A VW spokesman was not immediately available to comment.
A source close to the company said any decision on emissions control mechanisms would have been taken at the group's Wolfsburg headquarters, and not by regional divisions.
VW overtook Japan's Toyota in the first half of this year to become the world's biggest carmaker by sales, but is facing a sharp slowdown in its most profitable market, China.
The US scandal also adds to the challenge it faces in reviving its North American business, which has long lagged its performance elsewhere.
The scandal will be discussed at Friday's 20-member supervisory board meeting, a source close to the board said.
Some analysts have long criticised VW's centralised management system, saying it has delayed product launches and hampered its ability to compete in overseas markets.
German rivals Mercedes-Benz and BMW said on Monday the accusations made by US authorities against VW did not apply to them.
Photograph: Courtesy, Motorbeam