Audi CEO Rupert Stadler has been arrested in relation to the emissions cheating scandal.
"We confirm that Mr Stadler was arrested this morning. The hearing to determine whether he will be remanded is ongoing," a spokesman for parent company Volkswagen said.
"Mr Stadler is still presumed innocent."
The Munich prosecutors said Stadler's arrest was not made at the behest of US authorities. The executive was arrested at his home in Ingolstadt in the early hours on Monday, they said.
"As part of an investigation into diesel affairs and Audi engines, the Munich prosecutor's office executed an arrest warrant against Mr Professor Rupert Stadler on June 18, 2018," the prosecutor's office said in a statement.
A judge in Germany has ordered Stadler be remanded in custody, it said, to prevent him from obstructing or hindering the diesel investigation.
Munich prosecutors searched Stadler's private residence last week in their investigation of suspected fraud and indirect improprieties with documents. A total of 20 people are under suspicion in the probe.
The probe of Stadler focuses on cars sold in Europe that were believed to be equipped with software which turned emissions controls off during regular driving.
Stadler has been under fire since Audi admitted in November 2015 - two months after parent VW - that it also installed illegal "defeat device" software to cheat US emissions tests.
VW has pleaded guilty to criminal charges in the United States. Two managers are serving prison terms in the US.
Australian Associated Press