The "Arbeit macht frei" phrase is from the National Socialist regime led by Nazi leader Adolph Hitler and was placed at the entrance of several concentration camps, including Auschwitz and Dachau. Ebit is an acronym for "earnings before interest and taxes".
In a statement, Mr Diess said he was sorry for what he described as "definitely an unfortunate choice of words". "For that I would like to fully and completely apologize".More news: 49 killed in New Zealand mosque shooting
Diess made the gaffe while speaking on Tuesday to hundreds of managers at an internal company event after Volkswagen's annual earnings news conference.
Responding on LinkedIn, Diess said he had meant to say that more profitable divisions had more freedom to make decisions and hadn't meant to invoke the Nazi slogan.More news: Neil deGrasse Tyson Cleared in Sexual Misconduct Probe, Will Return to TV
Volkswagen's supervisory board on Friday said the group's history and the responsibility is therefore bears was a major part of its corporate identity.
Volkswagen was founded by the German Labour Front under Nazi rule in the 1930s and eventually admitted to using 15,000 slave workers during World War II.
The CEO said it wasn't his intention to make this expression in a way that could be misinterpreted, and he didn't consider the possibility that it could be. In a separate email to Business Insider, Volkswagen called the case "legally and factually flawed, and Volkswagen will contest it vigorously".More news: Kylie Jenner Reveals the Name She Almost Gave Stormi Webster