VW orders U.S. dealers to stop selling cars with new Mexico-built engine

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WASHINGTON -- Citing the risk of a leak in the transmission oil cooler, Volkswagen of America has ordered U.S. dealers to stop selling newer cars equipped with an automatic transmission and VW’s most common engine, the 1.8-liter EA888.

The stop-sale order, sent to dealers Tuesday and obtained by Automotive News, is a hiccup in VW’s ongoing push to localize parts production in North America.

VW started making the turbocharged four-cylinder engine last year in Silao, Mexico, hoping its fuel economy would help VW crack the U.S. market.

Starting in model year 2014, it was the base engine in the American-made Passat sedan and Mexican-made Beetle, and was available in the Mexican-made Jetta sedan.

Only cars produced after Feb. 1 were affected by the stop-sale order, which was first reported late Tuesday by the automotive Web site Jalopnik. VW has not yet told dealers the number of cars affected by the stop-sale order.

A VW spokesman did not immediately reply to a message seeking comment.

The memo says “a follow-up communication will be released to dealers as soon as possible," and that the required parts will be available "within the next week."

You can reach Gabe Nelson at gnelson@crain.com.

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