This spot was "unacceptable on many levels," according to a statement posted on social media by Volkswagen USA.
"Despite our difference in language, our corporate commitment to diversity and inclusion here at Volkswagen of America is universal," according to the company statement.
"This advertisement by our colleagues was in poor taste and not an accurate reflection of our views or values. We sincerely apologize to anyone offended and everyone who viewed."
The ad, which had been posted to VW's German Instagram, showed a black man strolling down a Buenos Aires street when a pair of massive white hands appear from above to push him around — with a giggling woman and comedic sound effects in the background.
Then one of the hands, with a thumb and index finger, flick the helpless black character into a street-side cafe or bar called "Petit Colon," which can be translated to mean "Little Columbus," as in sailor and colonizer Christopher Columbus.
"We will investigate how this could have happened — and draw the necessary consequences," the company said in another tweet. "Given our own history, Volkswagen has positioned itself as a company that does not tolerate any form of racism, xenophobia or discrimination."
The spot was meant to advertise the latest edition of VW's popular Golf line.
A VW representative told CNBC: “We firmly distance ourselves from the video and apologize sincerely. We will investigate how this could have happened — and draw the necessary consequences.”