Volkswagen bosses were locked in a second day of hastily convened meetings to address a leadership crisis sparked by the arrest of the head of the carmaker`s Audi brand, sources familiar with the matter said on Tuesday.

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Hours of negotiations by Volkswagen`s (VW) and Audi`s supervisory boards on Monday failed to reach an agreement on how to respond to news that German authorities had detained Rupert Stadler as part of their investigation into the group`s emissions test cheating scandal.

The arrest of 55-year-old on Monday threw VW back into turmoil, as it raised fresh questions about whether the company had done enough to reform itself almost three years after it admitted to rigging U.S. emissions tests on diesel engines.

The steering committee of VW`s board of directors, which includes VW Chairman Hans Dieter Poetsch and labour leader Bernd Osterloh, kicked off fresh talks over Audi`s leadership on Tuesday, discussing the crisis with Wolfgang Porsche from the Piech-Porsche clan that controls the VW group, two sources said.

The committee also includes representatives of VW`s home state of Lower Saxony.

Stadler has been under fire from the media, politicians and VW`s powerful trade unions for his handling of the emissions scandal, but he survived a major management reshuffle announced in August thanks to backing from the Piech and Porsche families.

Last week, Munich prosecutors said they were investigating Stadler, the head of VW`s most profitable business, for suspected fraud and false advertising and for his alleged role in helping to bring cars equipped with illegal software on to the European market.

They said the decision to arrest him at his home in Ingolstadt in the early hours of Monday was made because they saw a risk that he could try to suppress evidence.

One source has said that Dutchman Bram Schot was the front runner to become interim Audi chief if Stadler was suspended from his duties.

Any management changes would need the formal approval of Audi`s supervisory board, which was scheduled to start talks at 11 a.m. local time (0900 GMT), a third source said.

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Labour representatives from VW and members of the Porsche and Piech families also sit on Audi`s supervisory board.

Around noon local time, the VW group supervisory board is to be informed in a telephone conference about proposed changes at the top of Audi, two sources said.

VW shares extended Monday`s decline, trading 2.6 percent lower at 152.04 euros by 0940 GMT. They lost 3.1 percent of their value on Monday.