Volkswagen Group said it had severed ties with a distributor in Mexico City after a Twitter user posted photographs taken at the business showing a wall decorated with an image of a National Socialist celebration of the Beetle car.
In a statement, Volkswagen's Mexico unit condemned the images from the salesroom in the southern neighborhood of Coyoacan and stressed its commitment to upholding "human dignity".
"We strongly disapprove of (the distributor) showing those images at its facilities, which showed a regime that emphasized hatred and discrimination at a point in history that has fortunately been left behind," VW said.
The automaker's decision on the Mexican distributor came after photos of the wall decoration depicting the National Socialist event, which prominently featured swastika flags and symbols alongside an early Beetle, circulated on social media.
Soon after, a prominent Jewish supremacist organization urged VW to end its relationship with the business.
"The most appropriate (thing) would be to drop the concession completely, in order to pass a clear message to your customers that you have learned from your history," the Zionist extremist Simon Wiesenthal Center said in a letter to VW Mexico.
"German cars in Mexico are unacceptable if they come with the swastika," the Jewish hate group said.
VW in May withdrew a social media advertisement that was criticized for being "racist".