The ongoing diesel emissions scandal has severely damaged Volkswagen's reputation in the U.S., and will be quite costly to remedy.

Under the terms of a settlement that recently received preliminary approval from a federal judge, VW must buy back or modify 466,000 2.0-liter TDI cars.

But the company may face far worse problems in South Korea.

DON'T MISS: VW diesel plan gets preliminary approval, but buyback offers won't start yet

Volkswagen sells relatively few cars in that country, and doesn't operate any factories there, but the government is coming down hard on the German carmaker.

It is suspending sales of most VW models, alleging the company forged documents for emissions and noise tests, reports Reuters.

The ban also includes models from Audi and Bentley, for which South Korea is a more important market than the main Volkswagen brand.

2017 Audi A4

2017 Audi A4

The affected models include a mix of gasoline and diesel powertrains, and were sold as far back as 2007.

South Korea also fined VW 17.8 billion won ($16.1 million).

Volkswagen halted sales of most models in South Korea on July 25, in anticipation of the government's decision.

MORE: EU, consumer groups pressure VW for diesel cheat compensation in Europe

The company will likely have to re-certify all of the affected models before it can resume sales.

The certification process normally takes three months, but it may take longer for Volkswagen because regulators plan to be especially thorough, the South Korean environment ministry director Hong Dong-gon told Reuters.

At a public hearing on the matter at the National Institute of Environmental Research in Inchon, Volkswagen executives said that while mistakes had been made in documenting emissions and noise test results, the affected cars still met South Korean standards, according to Wards Auto.

2016 Bentley Continental GT Speed

2016 Bentley Continental GT Speed

The carmaker may take legal action against the sales ban.

In a letter to customers posted on its South Korean website, VW said it was considering requesting an "injunction of execution" against the decertification of its cars.

In addition to government sanctions, Volkswagen also faces pressure from consumers to provide compensation for its alleged deception.

South Korean law firm Barun Law is bringing more than 4,500 civil suits against the carmaker, with many plaintiffs demanding substantially more compensation than U.S. TDI owners will receive.

They are asking for full refunds of the purchase prices or lease payments of cars and—in some cases—personal damages.


Follow GreenCarReports on Facebook and Twitter