Why have Volkswagen's shares tumbled over 20% on European markets?

Volkswagen's shares have tumbled over 20% in the company's biggest one-day fall on the European markets.

VW shares were down 20.4% at 129.3 euros, after hitting a three-year low of 125.4%.

Here's what has driven the share price of the German carmaker down.

-- US authorities have alleged that the company used software for diesel VW and Audi branded cars that deceived regulators measures toxic emissions. This has amounted to the carmaker falsifying emissions data.

-- For this, the carmaker may have to cough up $18 billion in fines. A CNBC report has said that VW may face up to $37,500 in penalties for each US model found to be flouting emission norms. 

-- VW has called for a recall of over 482,000 cars, sold in the US in the last six years, based on an order issued by the US Environmental Protection Agency

-- Some analysts have called for the Chief Executive Martin Winterkorn to resign. Winterjorn had, on Sunday, said that he was “deeply sorry” for the breach of US rules and ordered an external investigation.

-- A source close to the company said any decision on emissions control mechanisms would have been taken at the group's Wolfsburg headquarters, and not by regional divisions.

VW overtook Japan's Toyota in the first half of this year to become the world's biggest carmaker by sales, but is facing a sharp slowdown in its most profitable market, China.

The scandal will be discussed at Friday's 20-member supervisory board meeting, a source close to the board said.

German rivals Mercedes-Benz and BMW said on Monday the accusations made by US authorities against VW did not apply to them.

(With agencies)