Martin Winterkorn, chief executive of Volkswagen, has resigned following a discovery that the carmaker has been manipulating diesel emissions tests in the US.
In a statement, Mr Winterkorn said he was shocked by recent events, adding that although he did not believe he had done anything wrong, his departure was for the good of the company.
"I am doing this in the interests of the company, even though I am not aware of any wrongdoing on my part," he said.
"I am clearing the way for a fresh start with my resignation," he added.
Volkswagen is the world's biggest carmaker, but it has admitted to deceiving US regulators during exhaust emissions tests. A device was installed in the vehicles that would give more favourable test results – allowing its diesel cars to produce up to 40 times more pollution than normally permitted. The company has said that 11 million vehicles worldwide were involved in the scandal and it has set aside €6.5 billion (£4.7 billion) to cover associated costs.
On Friday (September 18th), shares in Volkswagen were valued at €162.20 in Frankfurt. After allegations were made against the company, shares fell 18.6 per cent on Monday and 19.8 per cent on Tuesday. On Wednesday morning, they dropped another 2.2 per cent at the open and reached their lowest point at 102.05 before recovering slightly to close at €111.95.
Mr Winterkorn said he was "stunned" at the scale of the misconduct. However, he also said he believed that the carmaker would overcome the "grave crisis".
"The process of clarification and transparency must continue. This is the only way to win back trust," he said in his resignation statement.
Although Mr Winterkorn claims he knew nothing about the scandal, those involved in the car industry believe this type of deception could extend to other carmakers and other countries.
Greg Archer, a former government adviser and head of clean vehicles at the Transport & Environment thinktank said manipulation of air pollution data could be 'very widespread" and said tests in Europe are more open to abuse than those in the US.
He said he was not surprised by the scandal. "There has been a lot of anecdotal evidence about carmakers using these defeat devices. All credit to the EPA for investigating and finding the truth."