In 1996, the GT model returned but included the EJ25D engine along with unique interior colors and exterior updates, as well as suspension upgrades.

The North American Legacy Outback wagon was released in July 1994 and FWD was standard for the 1995 model year with AWD optional.

It included upgraded interior and sunroof, spoiler, and alloy wheels on the "L" trim level cars.

Sedan versions were only available with Subaru's E-4AT four-speed automatic transmission with 4-Wheel Drive and Variable Torque Distribution Centre Differential (VTD-4WD), while Touring Wagon versions had the additional option of five-speed manual transmission with 4-Wheel Drive and Limited-Slip Viscous Centre Differential (VCD-4WD).

[citation needed] The Legacy GT was available for sale around the same time as the Nissan Avenir Salut turbocharged 2.0 L with AWD.

The GT-B also offered larger brakes, sway bars, wheels, and some different interior options.

Manual versions of the GT-B and RS also featured the EJ20R twin turbo motor, which was the first Legacy to offer 206KW.

The TS type R, was a 2.0L naturally aspirated DOHC version of the Subaru flat-four, and had comparable trim to the GT's.

The LPG option was introduced as an alternative fuel source on European models with the 2.0 L and 2.2 L engines, built by company Necam Koltec.

This engine was popular with Japanese buyers due to reduced tax liability based on Japanese vehicle size legislation offering performance advantages over larger cars sold there with bigger engines and higher tax assessments.

A continuous traction delivery system, called VTD by Subaru, was used with all JDM turbocharged vehicles with automatic transmission.

New equipment added to the list of features included RF remote keyless entry, fog lights on the upper trim levels and variable-assist power steering.

Side turn signal repeater lenses that were introduced on the USA 1992–1994 Legacy were replaced by a plastic cap that covers a hole where the side repeater is utilized internationally, and the color of the cap matches the color of the door rub strip on vehicles sold in North America.

[citation needed] Potential causes may include inadequate head gasket design, coolant charge, and corrosion.