It might generate higher emissions, but whether using it for another year or two generated more emissions overall, I think it's a bit trickier to know if it was worse overall.

Enough VW's not sold mean VW's not built, and producing the car is a large amount of the car's expected lifetime CO2 footprint (I've seen from 1/5th to 1/3rd).

If they were just delaying a less polluting vehicle purchase, a delay is a net negative, but since now they are driving nothing, that means it's actually possible the older vehicle was the better choice, especially since pollution from cars if very front-loaded (if we assume a new car that was purchased would be unused or very lightly used, since they are able to go without a car now).

Plus if you trade in one functional old car for a newer model with better emmissions, that perfectly good car is not magically lifted into automobile heaven never to emit again. It will be bought on the used market by someone else can't afford a new car (much less a $70K Tesla) and continue to emit whatever it emits today.