German carmaker Audi has appointed a new chairman and a new development chief as Volkswagen's flagship luxury division struggles to recover from an emissions scandal.

Audi admitted two weeks ago that its 3.0 litre V6 diesel engine was fitted with emissions-control software, deemed as illegal in the United States where the scandal has already engulfed its corporate parent VW and the mass-market VW brand.

Audi's supervisory board on Thursday appointed VW's new chief executive Matthias Mueller as chairman, replacing long-time VW CEO Martin Winterkorn who vacated the post in November in the wake of the scandal that also forced him out as VW group CEO.

The board also picked Stefan Knirsch, head of engine development to succeed Ulrich Hackenberg, top engineer at Audi and the VW group. Hackenberg was suspended two months ago together with two other executives closely associated with the development of the VW engine at the centre of the scandal, codenamed EA 189.

"The investigation is making progress," Audi deputy chairman Berthold Huber said. "That is a necessary and good sign."

US law firm Jones Day, which has been leading external investigations of the scandal at Wolfsburg-based VW, has been tasked to clear up the manipulations at Audi, the works council said in a statement.

The V6 diesel engine was designed and assembled by Audi at its Neckarsulm factory in Germany, and used in about 85,000 premium models sold by the VW, Audi and Porsche brands in model years 2009 through 2016.

The admission from Audi, which contributes about 40 per cent to VW group profit, has raised the pressure on Chief Executive Rupert Stadler, a 25-year VW group veteran who has led the Ingolstadt-based automaker for nine years.

After being questioned by the Audi board on Thursday, Stadler will also need to convince VW's 20-member controlling panel at a meeting on Dec. 9 to discuss the state of investigations. VW plans to publish intermediate results of its probe into the scandal next week.

"We pushed for action in the interest of workers and that's exactly what's happening now," Audi labour boss Peter Mosch, a member of the supervisory board said. "Further consequences need to be drawn now to ensure that this won't happen again." – Reuters