It isn't yet clear whether Martin Winterkorn knew about the "defeat devices" in certain U.S. cars, notes Olaf Storbeck.
Martin Winterkorn, the former boss of Volkswagen who quit last month, will step down from his remaining posts related to the company.
Volkswagen will start firing people responsible for rigging US emissions tests and shake up management on Friday,
VW had dodged environmental rules for which penalty could run up to more than $18 billion.
Volkswagen faces paying out billions of dollars in fines and compensation after it admitted rigging tests on some of its diesel cars to make them appear cleaner.
The carmaker was presenting itself as being run by technological diehards obsessed with building the world's best cars.
Volkswagen can pay $18 billion, over time, and retain its credit rating.
Volkswagen may also have to compensate customers for misleading them about a car's performance.
Volkswagen overtook Toyota as the world's largest carmaker by sales.
VW kept set aside 6.5 billion euros just to cover the potential costs of recalling and fixing the affected cars.
Volkswagen told US dealers to halt sales of some 2015 diesel cars.
New Volkswagen Chief Executive Matthias Mueller warned staff on Tuesday to brace for "massive cutbacks" in response to the diesel emissions scandal that has hammered the company's stock and reputation.
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.
Volkswagen did not name a successor, but said proposals on management appointments would be made to a full board meeting on Friday.
Volkswagen is under huge pressure to act, with its shares down more than a third in value since the crisis broke, and the bad news still coming.
Expanding the compensation programme could add 80,000 vehicles and $80 million.
Volkswagen was the third largest automotive brand after Toyota and BMW in a 2015 listing of the world's top auto brands.
Europe's largest carmaker had previously admitted to installing cheat software on up to 11 million vehicles worldwide with smaller diesel engines.
Volkswagen announced plans on Tuesday to refit up to 11 million vehicles and overhaul its namesake brand.
Industry experts said the scandal could hit VW hard, just as it was emerging from a damaging leadership battle.
Jeff Bezos tops Harvard Business Review list on financial parameters but stands 87th overall.
Volkswagen is looking at ways to cut costs and boost cash flow.
If Volkswagen's sales were to plunge in North America in the coming months, this would not only have an impact on the company, but on the German economy as a whole.
The company said it would appoint a US law firm to conduct a full investigation
The scandal has also rocked the wider car market, with manufacturers fearing a drop in diesel car sales.
Volkswagen AG said a scandal over falsified US. vehicle emission tests could affect 11 million of its cars around the globe.
Late on Monday, Volkswagen's U.S. chief Michael Horn said the company had "totally screwed up" and promised to make amends.
German prosecutors launched an investigation on Monday into fraud allegations against former Volkswagen boss Martin Winterkorn.
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