Volkswagen is embroiled in one of the biggest corporate scandals of recent years.

Here’s our complete guide to what’s happened, and what it all means.

What did Volkswagen do?
The German car maker has been installing “defeat devices” – software that allows cars to cheat in emissions tests, making them appear cleaner than they actually are.

Crucially, the software “knew” when it was being tested, allowing it to switch emissions controls on and off.

It knew this thanks to the software’s algorithm, which used information about steering patterns, engine use and even atmospheric pressure to tell whether it was under scrutiny.

Volkswagen has been installing the software in certain models of its cars for at least six years.

How do diesel cars cap pollution levels?
To meet pollution levels, modern diesels are usually fitted with a tank containing a chemical compound called urea. This turns exhaust fumes into harmless nitrogen and water, similar to how a catalytic converter works in a petrol engine.

But there is a trade-off between pollution control and engine performance. Reducing emissions means that fuel efficiency takes a hit, and the car costs a lot more to drive.

Which cars are affected?
Volkswagen has , including Audi A3, VW Jetta, Beetle, Golf, and Passat models.

Only 482,000 of those are in the US, where the scandal was uncovered. .

A is available. Sales of these cars have been halted.

2009 VW Jetta, VW Jetta Sportswagen – test groups 9VWXV02.035N/9VWXV02.0U5N
2010 VW Jetta, VW Jetta Sportswagen, VW Golf, Audi A3 – test group AVWXV02.OU5N
2011 VW Jetta, VW Jetta Sportswagen, VW Golf, Audi A3 – test group BVWXV02OU5N
2012 VW Jetta, VW Jetta Sportswagen, VW Golf, Audi A3, VW Beetle, VW Beetle Convertible – test group CVWXV02OU5N
2012 VW Passat – test group CVWXV02OU4S
2013 VW Jetta, VW Jetta Sportswagen, VW Golf, Audi A3, VW Beetle, VW Beetle Convertible – test group CVWXV02OU5N
2013 VW Passat – test group DVWXV02OU4S
2014 VW Jetta, VW Jetta Sportswagen, VW Golf, Audi A3, VW Beetle, VW Beetle Convertible – test group DVWXV02OU5N
2014 VW Passat – test group EVWXV02OU4S
2015 VW Jetta, VW Jetta Sportswagen, VW Golf, Audi A3, VW Beetle, VW Beetle Convertible, VW Passat – test group FVGAV02.0VAL
What happens if you own one of these cars?
The , and .

Volkswagen will get in touch with you if your car has to be returned, and it will perform the repairs free of charge.

It looks likely that the necessary software update will leave Volkswagen drivers with a car that doesn’t perform as they were told it would when they bought it.

Consequently, in order to remain compliant.

But if there is a recall and your car is not updated, the resale value of your vehicle could take a hit, and you could invalidate your insurance.

What penalties is the company facing?
under the US Clean Air Act, which allows fines of up to $37,500 per car.

The US Department of Justice and Federal Bureau of Investigations could also bring criminal cases. The EU may bring fines of its own.

The German company has set aside €6.5bn (£4.7bn) to deal with the penalties it faces.

The greatest sting might be that felt by investors. Shares in the company dropped by more than a third in the two days after the scandal was revealed.

How was Volkswagen found out?
Transport campaigners in early 2014.

They had intended to prove to Europe that clean diesel cars could exist, and drove several car models 1,300 miles from San Diego to Seattle to prove their point.

Peter Mock and John German

But when the results came back they made no sense. Despite sailing through lab tests, the Volkswagens were pumping out dangerous levels of toxins, some 35 times higher than the legal limit.

The pair had inadvertently stumbled upon one of the biggest automotive scandals in recent years. They tipped off the EPA, which began an investigation in May 2014. This eventually led to Volkswagen’s admission of its wrongdoing.

Are other manufacturers up to the same tricks?
There are fears that other diesel manufacturers may have been employing the same tactics.

The share prices of many diesel manufacturers have fallen, implying that investors are worried this is commonplace. And there are concerns that .

with the results of emissions tests in this way.

Other are already commonplace in Europe, and we have known about them for some time.

These tactics not only lower a car’s “official” emissions, but also give it an unrealistic fuel economy figure.

Has this harmed the environment?
Emissions have not only been much higher than we thought, but the promise of “clean diesel” might also be dead.

Analysis suggests that Volkswagen’s rigging may have meant that an extra 1m tonnes of NOx pollution have been emitted each year.

Health experts have claimed that because emissions have not fallen.

What happens next for Volkswagen?
With its shares left bruised and battered, the focus on Volkswagen now centres around whether its chief executive will resign, or be forced out.

Martin Winterkorn, the German company’s boss, was due to have his contract renewed this Friday, which would have seen his term extended until 2018.

It is believed that Volkswagen’s board met last night to discuss Mr Winterkorn’s future.

Volkswagen boss Martin Winterkorn

But the fallout won’t end there. A German opposition party has .

Patrick McLoughlin, the transport secretary, .

The French finance minister has said that a “Europe-wide” probe is necessary. Germany, South Korea, and Italy have all launched independent inquiries.

Is this the catalyst to shake up the car industry?
The investment house Bernstein said , after several decades of the European authorities promoting the fuel on the grounds that it produces less carbon dioxide than gasoline.

More than half of all new cars sold throughout Europe run on diesel engines. In Britain, the number of diesel cars has risen from 1.6 million to 12 million since 1994.

“The move against VW is going to act as a catalyst to speed up the fall in diesel market share in Europe and halt it in the US,” Bernstein said in a note to clients.

Vehicle manufacturers that rely on alternative fuels – such as electric car maker Tesla – could enjoy a greater share of the market as a result of a transition away from traditional fuels.