Other social media users took offence at the sign above the building the man disappears into, which reads "Petit Colon", a reference to colonialism.
VW replied to the flood of criticism on Instagram, insisting that the "origin of the people depicted is irrelevant" and that the company opposed "all forms of racism, xenophobia and discrimination".
"As you can imagine, we are surprised and shocked that our Instagram story could be so misunderstood," the post read, adding that the company would no longer run the ad.
VW issued a separate statement on Wednesday, apologising for the video and saying it was looking into what happened.
"Without question: the video is wrong and tasteless," the automaker said.
Many viewers expressed disbelief that the ad was ever allowed to air.
"No one here got the wrong impression," said one Instagram commenter. "This is bad and racist communication."
"The people who made this knew exactly what they were doing," another wrote on Twitter.
- Telegraph