Possibly, probably, maybe, definitely. To some degree, I suspect its not functioning in the manner that VW intended, therefore a new engine is almost certainly needed. or not needed. Probably.
@JAMA Sorry to be a little bit forward but has anyone asked you what the garage has actually told you they think is wrong with the engine?
Here's one http://www.ebay.co.uk/itm/132147527012?_trksid=p2060353.m1438.l2649&ssPageName=STRK:MEBIDX:IT