The Felicia was a heavily reworked version of the Favorit, retaining its core structure but with new outer panelwork to give it a fresh, more modern appearance, with a redesigned front end and a wider range of VW-sourced engines.

The Felicia made headlines in April 1998, after its high satisfaction score gave Škoda the "Best Manufacturer" accolade in that year's J.D.

The base model was a five door hatchback, and from June 1995, was accompanied by an estate, replacing the Favorit-based Forman, now redubbed as the Felicia Combi (Typ 795).

The pick up model also had a lifestyle edition named the Felicia Fun, (Typ 796) conceived mostly for the market in Western Europe.

[5] All internal combustion engines used in Felicia are inline four-cylinder designs, operate on the four-stroke cycle, are fuel injected, and water cooled.

The line up included the old 1.3 litre overhead valve (OHV) Škoda petrol engines, now with Bosch Mono Motronic single point fuel injection (up until 1997), and Siemens multi-point fuel injection, with two rated power outputs of 40 kW (54 PS; 54 bhp) and 50 kW (68 PS; 67 bhp).

The 1.6 litre model served as a homologation basis for the Škoda Felicia Kit Car used in the World Rally Championship's F2 class.

For the Felicia, Škoda had developed its own 75 kW (102 PS; 101 bhp) aluminium 1.6 OHC engine, which appeared in some Favorit prototypes and Rally cars, but Volkswagen decided to use its old 1.6MPI 55 kW (75 PS; 74 bhp) The only transmission was a five speed manual gearbox, which was of a transaxle design, and contained the differential and final drive units.