Volkswagen CEO resigns in wake of pollution-testing scandal

Volkswagen chief executive Martin Winterkorn has resigned in the wake of the German car company’s spiralling scandal over pollution test cheating.

The scandal emerged on Friday, when the EPA alleged that Volkswagen equipped about 482,000 cars with software that turns off pollution controls during emissions tests.

Mr Winterkorn said he was clearing the way for a fresh start with his resignation.

He said he was “stunned” by the scandal.

“I am shocked by the events of the past few days,” he said in a statement.

“Above all, I am stunned that misconduct on such a scale was possible in the Volkswagen Group.”

“Volkswagen needs a fresh start, also in terms of personnel. I am clearing the way for this fresh start with my resignation.”

The scandal has sparked a US criminal investigation and worldwide legal action with unfathomable financial consequences for the car giant.

According to the US authorities, VW has admitted it equipped the cars with sophisticated software that covertly turns off pollution controls when the car is being driven.

It turns them on only when it detects the vehicle is undergoing an emissions test.

With the "defeat device" deactivated, the car can spew pollutant gases into the air, including nitrogen oxide in amounts as much as 40 times higher than emissions standards, said the US Environmental Protection Agency (EPA).

The EPA, which announced the allegations on Friday along with California state authorities, is conducting an investigation that could lead to fines of more than $US18 billion ($A25.4 billion).

VW has halted all diesel vehicles sales in the United States.

With AAP.