Investigators searched the company's main office in Villers-Cotterets in northern France Friday, as well as another office near Paris, seizing documents and computer hardware in the process, the source added.
Like other countries, France has opened a probe into possible fraud over the pollution-cheating software installed in diesel engines by Volkswagen, which has admitted that 11 million vehicles worldwide are equipped with the programme that dupes emission testing.
Nearly one million diesel cars of the Volkswagen brands -- VW, Audi, Skoda and Seat -- have been sold in France in recent years fitted with the pollution-cheating software, according to VW's French unit.
The World Health Organization in 2012 declared emissions from diesel engines to be carcinogenic.
Some of the vehicles with the cheat devices were found to emit 40 times the legally sanctioned levels of air pollutants called nitrogen oxides.
Police in Italy also raided Volkswagen's offices last week.
In Germany, prosecutors said Friday they had identified fewer than 10 suspects in the pollution-cheating scandal, as Volkswagen announced a drop in worldwide sales.
The revelations about VW's manipulation of its diesel engines have sparked one of the biggest scandals in the history of the automobile sector.
Chief executive Martin Winterkorn was forced to resign -- replaced by Matthias Mueller, the former boss of the group's luxury sports brand Porsche.
VW also 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.
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.
The auto giant has said it will recall a total of 8.5 million diesel vehicles in Europe