VW Stop-Sale Order — Almost a Month’s Worth of Sales

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Volkswagen of America has issued a mandatory stop-sale order on four of its 2014 cars built just this past February. The order applies to Jettas, Beetles, Beetle Convertibles and Passats equipped with a 1.8-liter turbocharged engine and an automatic transmission.

Dealers were also told to discontinue using these models as demo vehicles and to keep the affected vehicles “in a secure area where it cannot be made available for sale, lease or trade.”

The dealer letter, obtained by auto website Jalopnik, said that a follow-up communications will come from VW as soon as possible. Instructions on how to repair the problem and the parts required to repair the problem will be available “within the next week.”

There were few details in VW’s letter, but Automotive News cites a VW spokesperson who said the problem is the result of a supplier changing the specifications of an O-ring linking the transmission oil cooler to the transmission. VW staff noticed a leak at the entry port and issued the stop-sale order. The VW spokesperson said, “In extreme cases it could cause a fire.”

The company is discussing the issue with the National Highway Transportation and Safety Administration on how to deal with cars that have already been sold. There is no word on how many cars that might be.

In the first three months of 2014, VW has sold a total of 37,368 Jettas, 8,167 New Beetles and 24,283 Passats. Not all were equipped with the engine/transmission pair that is affected, but VW believes the total to be about 25,000. That is only slightly less than the total number of Jettas and Passats VW sold in the month of March.

Based on the recall of 6.4 million vehicles by Toyota Motor Corp. (NYSE: TM) earlier Tuesday, VW’s problem is pretty small. But based on potential impact on sales, it could be severe.

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