Head of Audi arrested in Germany over diesel scandal

FRANKFURT: Volkswagen was holding crisis talks on Monday to find a stand-in boss for its Audi brand, a source familiar with the discussions said, after German authorities arrested Audi CEO Rupert Stadler as part of a probe into emissions test cheating.

Stadler is the most senior company official to be detained so far since Volkswagen (VW) admitted in September 2015 to using illegal software to rig USemissions tests on diesel engines.

Munich prosecutors, who widened their probe into Audi earlier this month, said Stadler was being held due to fears he might hinder their investigation into the scandal, plunging VW into a leadership crisis.

"We need to find a solution for Audi´s leadership for the time when he is not here," the source familiar with the talks said about Stadle's position. "We will comment on this later. "VW and Audi directors were discussing the leadership crisis in separate meetings on Monday.

VW has set aside around $30 billion to cover fines, vehicle refits and lawsuits since its "dieselgate" scandal broke, and has announced plans to spend billions more on a shift to electric vehicles as it seeks to rebuild its reputation.

Whereas group CEO Martin Winterkorn resigned in the days after the cheating was disclosed, Stadler has remained in post and was this year promoted by new VW boss Herbert Diess in an overhaul aimed at speeding up the group's reforms.

"His arrest is another low point in VW's diesel saga," said Evercore ISI analysts, who have criticised the group for a slow pace of reform. "Almost three years after the diesel scandal broke, it takes police to take action against the Audi CEO.

"The United States filed criminal charges against Winterkorn in May, but he is unlikely to face US authorities because Germany does not extradite its nationals to countries outside the European Union.

The Munich prosecutors said the move against Stadler was not made at the behest of US authorities. The 55-year-old was arrested at his home in Ingolstadt in the early hours on Monday, they said.