The hammer is falling on Volkswagen in both the U.S. and Canada. VW Canada told its dealers yesterday to stop selling diesel-powered vehicles involved in an emissions-testing scandal that recently came to light.

This statement comes just a few days after the U.S. Environmental Protections Agency and the California Air Resources Board revealed its findings that allege five of the automaker’s diesel-powered vehicles include “defeat device” software that circumvents emissions standards for certain air pollutants late last week. Though the diesel vehicles were marketed as being better for the environment, the EPA said though the VW vehicles in question passed the emissions test, when on the road, they emit up to 40 times the national standard for nitrogen oxide.

The Financial Post reported VW Canada spokesman Thomas Tetzlaff said in an email that the Canadian division of the automaker is working with its American counterpart and parent company in Germany to resolve the issue.

Tetzlaff was reported going on to say that nearly all of the company’s VW brand diesel cars are included in the stop sale order in Canada, including the Jetta, the Golf and the Beetle.

Specifically, in Canada, the affected diesel models include:

• The VW Jetta — from 2009-2015.
• The VW Golf — from 2010-2015.
• The VW Beetle — from 2013-2015.
• The VW Passat — from 2012-2015.
• The VW Golf Wagon/Sportwagon — from 2009-2015.

Martin Winterkorn, VW chief executive officer, addressed the issue on Sunday in a statement, nothing, "I personally am deeply sorry that we have broken the trust of our customers and the public.”  

Interestingly, Tuesday morning, Reuters was reporting VW will be dismissing Winterkorn over the emissions-cheating scandal. Reuters cited a German newspaper, The Tagesspiegel, which reported unidentified sources on Volkswagen's supervisory board as saying Winterkorn would be replaced by Matthias Mueller, the head of the carmaker's Porsche sports car business.

Volkswagen AG also released a statement Tuesday morning noting that further internal investigations conducted to date have established that the aforementioned “defeat device” software is also installed in other Volkswagen Group vehicles with diesel engines.

“For the majority of these engines the software does not have any effect,” the company said. The discrepancies cited include vehicles with Type EA 189 engines, and involves some 11 million vehicles worldwide.

“A noticeable deviation between bench test results and actual road use was established solely for this type of engine. Volkswagen is working intensely to eliminate these deviations through technical measures. The company is therefore in contact with the relevant authorities and the German Federal Motor Transport Authority (KBA – Kraftfahrtbundesamt),” it continued.

To cover the service measures and any fines that may be billed out by regulatory agencies, VW plans to set aside a provision of some $6.5 billion euros, which will be recognized in the profit and loss statement in the third quarter of the current fiscal year.

The said, this amount may be subject to revaluation as the scandal unfolds.

“Volkswagen does not tolerate any kind of violation of laws whatsoever. It is and remains the top priority of the board of management to win back lost trust and to avert damage to our customers. The group will inform the public on the further progress of the investigations constantly and transparently,” VW management shared.

The VW emissions-cheating scandal is already on the to-do lists of many U.S. and Canadian law firms.

In fact, Canadian Merchant Law Group LLP announced today it is launching national class action litigation against Volkswagen.

A B.C. Supreme Court Class Action was filed today with the Court in Vancouver against Volkswagen, and similar lawsuits are being filed in the coming days by Merchant Law Group lawyers from Alberta, Ontario and Quebec, as part of this Canada-wide class action litigation, the law firm reported.

Law firms in the U.S. are gearing up, as well, with Block & Leviton and Seattle-based Keller Rohrback both filing nationwide class action complaints against the automaker already.

Though VW Canada has issued a stop-sale, as for what will happen to the impacted VW vehicles already on the road in Canada, we will have to wait and see.