Volkswagen is set to be the subject of a tax evasion probe by German prosecutors over 800,000 vehicles with understated CO2 figures.

It emerged that it was under investigation as the German manufacturer announced that fixes to redress the CO2 emissions issues with its 1.6 and two litre TDI engines had been presented to the Federal Motor Transport Authority in Germany.

The inquiry centres on the fact that the CO2 emissions of 800,000 had been understated, leading the lower tax payments.

Braunschweig state prosecutor Birgit Seel told the FT that the investigation centred on five individuals, who she declined to name.

VW has set aside two billion euros to cover the costs of its CO2 issues, including the payment of tax to relevant governments.