Former Audi chief executive Rupert Stadler's request to be freed from custody has been rejected, the Munich court of appeal said on Monday.
Mr Stadler was arrested in mid-June as part of a broader probe into emissions cheating at the premium brand, which is part of Volkswagen Group.
He was detained on fears he would seek to influence witnesses being questioned as part of an investigation into Volkswagen's emissions scandal.
"The chamber emphasises that danger of obstructing justice remains. The release of the accused from custody was therefore rejected," the Munich court said.
Mr Stadler, who stepped down in June, had asked to be released from custody and appealed against his arrest, the Munich prosecutor's office said.
The prosecutors are probing Mr Stadler and another member of Audi's top management for suspected fraud and false advertising tied to illegal pollution levels in its cars and manipulated vehicle tests.
The decision comes after the company last week said it stepped up production ahead of a September deadline when it becomes harder to register vehicles as roadworthy.
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From next month, vehicles need to pass new pollution rules known as the Worldwide Harmonized Light Duty Vehicles Test procedure, or WLTP. Cars which are registered for sale ahead of this deadline can still be passed on to dealerships after September.
The Ingolstadt-based manufacturer said it had ramped up production ahead of the deadline and therefore does not expect to see a drop in vehicle deliveries this year, even as it faces problems adjusting its portfolio.
"The company expects significant fluctuations during the year in production, inventories and deliveries, as well as in its key financials," Audi said in a statement accompanying its financial results.
"In this context, the first half of the year featured a significant increase in production levels for anticipatory stockpiling."
Several manufacturers including Audi parent Volkswagen and rival Daimler have said margins may suffer because of delays getting their fleet ready for the new road certification standards.
Audi added it expects its research and development expenditure ratio to be slightly above the long-term target corridor of 6 to 6.5 per cent of sales.
Audi also assumes that the capital expenditure ratio will be also be slightly above its target level of 5 to 5.5 per cent.