CEO Matthias Mueller said VW had "taken first consequences" from the tests on monkeys and put on leave Steg, the general representative for external relations and government affairs, who had "taken full responsibility".
The New York Times reported last week that US researchers in 2014 locked 10 monkeys into airtight chambers and made them breathe in diesel exhaust from a VW Beetle while the animals were watching TV cartoons.
Separately, it emerged that a research group funded by VW, Mercedes-Benz parent Daimler and BMW had ordered a study in Germany measuring the effects of inhaling nitrogen dioxide on 25 human volunteers.
Mueller yesterday labelled the animal testing "wrong ... unethical and repulsive", reported Spiegel Online.
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And Steg had vowed in the top-selling Bild daily that "what happened should never have happened, I regret it very much".
He admitted that he had been informed in advance of the US monkey experiment but insisted he prevented a plan to carry these tests out on humans.
The German government has called a special meeting with the affected car companies to ask them to explain themselves.
The EU Commission has summoned Germany and eight other EU countries to explain how they plan to lower toxic emissions to meet the bloc's air quality standards if they want to avoid action before the European Court of Justice.
Chancellor Angela Merkel has strongly condemned the latest controversy to engulf the nation's powerful auto industry.
"These tests on monkeys or even humans are in no way ethically justified," said Merkel's spokesman Steffen Seibert yesterday.
All three German carmakers have scrambled to distance themselves from the research body in question -- the now defunct European Research Group on Environment and Health in the Transport Sector (EUGT) -- and promised to launch internal investigations.