VW Brazil said 193,620 Novo Gol and Voyage models sold domestically and exported throughout Latin America could be affected by a lack of lubrication on the rear wheels causing them to become noisy, lock up and even detach completely.
The recall affects vehicles made in Brazil before July 2009 and marks the third major recall by VW in Brazil since April 2008.
The first involved 477,000 Fox small cars after 22 owners suffered hand and finger injuries and mutilations when they tried to fold down the rear seat.
The second, in December 2008, covered 120,000 Fox, Novo Gol and Voyage models that had a brake fault.
Volkswagen is the second largest automotive manufacturer in Brazil after Fiat and has sold more than 17 million vehicles in the country since opening there 50 years ago.
It currently employs 22,000 workers and produced around 700,000 vehicles across four factories in 2009.
Late last year VW committed US$3.5 billion (AUD$3.9 billion) over four years to increase production and market share in Brazil.