"More than two, but a lot fewer than 10 people" were suspected of masterminding the scam where sophisticated software skews pollution emissions tests in diesel engines, Klaus Ziehe, spokesman for the prosecutors, told AFP.
After VW admitted last month to fitting 11 million vehicles worldwide with the rogue devices, plunging the world's biggest automaker by sales into an unprecedented crisis, the prosecutors in the northern city of Brunswick near VW's headquarters launched a criminal investigation into suspected fraud.
Earlier this week, news weekly Der Spiegel reported that "at least 30 people" were involved in the deception -- a number that VW dismissed as "completely without basis".
The group's new chief executive, Matthias Mueller, said last week that four employees, including three executives in charge of engine development at different stages, had been suspended.
German press reports named two of them as Ulrich Hackenberg, development chief at VW's Audi subsidiary, and Wolfgang Hatz, his counterpart at luxury sports car brand Porsche. Volkswagen has not confirmed that information.
In addition to the German criminal probe, VW is conducting its own internal investigation and has hired a US law firm to help.
- Worldwide sales down -
At the same time, Volkswagen said deliveries to customers were down for both September and the first nine months of this year.
VW said it sold 885,300 vehicles worldwide in September and 7.431 million in the first nine months. Both figures represented a decline of 1.5 percent compared with the corresponding period a year earlier.
From a regional breakdown of the sales figures, it was not immediately apparent whether the scandal, which broke on September 18, has had any direct effect on business just yet.
European sales in fact advanced by 3.8 percent in September, and sales in Germany were up 1.5 percent, VW said.
North American sales were up six percent in September, despite the fact it was US regulatory authorities who set the ball rolling, accusing VW of fitting its diesel engines with the cheating software.
By contrast, sales in Brazil, Russia and China -- whose slowing economies are causing headaches not just for VW, but for other carmakers as well -- fell by 43.7 percent, 26 percent and 0.8 percent, respectively.
- New board appointment -
As it seeks to contain the crisis, VW announced Friday it had named a top executive from rival carmaker Daimler as its new board member in charge of integrity and legal affairs from January 1.
VW said its supervisory board chief Hans Dieter Poetsch, had asked his counterpart at Daimler, Manfred Bischoff, to release Christine Hohmann-Dennhardt from her contract at Daimler early.
The revelations about VW's manipulation of its diesel engines have sparked one of the biggest scandals in the history of the automobile sector.
In addition to the costs of repairing so many vehicles, the once-respected automaker now faces billions of euros (dollars) in potential fines and legal costs, aside from the incalculable fallout from lost sales and diminished customer trust.
VW is facing legal probes in a number of countries, not just the United States and Germany. On Thursday, the German federal transport authority KBA said it would order VW to recall 2.4 million vehicles in Germany alone, starting from January 2016.
The carmaker responded by saying it would recall 8.5 million vehicles across all 28 EU member states.
Following Germany's move, the European Commission on Friday stressed that each member state would be expected to monitor closely if Volkswagen recalls affected vehicles on their (respective) territories.
In Italy police on Thursday raided VW's main office in Italy, as well as those of its sports car subsidiary Lamborghini.
And on Friday Italian business raised concerns for the country's auto parts manufacturers, and the Bank of Italy said in its monthly bulletin that the VW crisis adds "a new element of uncertainty for European economies," with repercussions "still difficult to evaluate".