[1]: 28  VW of America's engineering team was led by Duane Miller, who acknowledged the initial design was completed in partnership with Sheller Globe.

The first cars under the name Rabbit Pickup were sold in the United States in late 1979 for the 1980 model year, delayed from a planned spring 1979 rollout.

European Caddys were built in Volkswagen's plant TAS in Sarajevo, Bosnia and Herzegovina (at the time SFR Yugoslavia), between 1982 and 1992.

[1]: 28  A fibreglass-reinforced plastic box cap was available to cover the open bed, turning the Caddy into a small panel van with an enclosed 2.65 m3 (94 cu ft) of cargo volume,[8] and it also could be used as a caravan with an appropriate in-bed unit.

[1]: 28  For the pickup truck market, Volkswagen sold the Taro, a rebranded Toyota Hilux, from 1989 to 1997;[9] the Caddy name continued in 1995 as a slightly smaller panel van and multi-purpose vehicle developed with Škoda and SEAT.

Typical payload is 550 kg (1,210 lb), depending on drivetrain and market specifics, and the two rear cargo doors are of a 60/40 split design.

The third generation of Volkswagen Caddy debuted at the end of 2003, at the RAI Commercial Vehicle Show in Amsterdam, with production commencing in May 2004.

The new model Caddy has a more aerodynamic design, the angle of the windscreen and A pillar is more horizontal, making the dashboard bigger and the bonnet (hood) smaller.

The Life version has interior trimmings like that of a conventional five seater wagon while the Kombi is a naked panel van with windows and seats.

The current shape Typ 2K Caddy, on sale in Europe since 2003, is a leisure activity vehicle with Volkswagen Golf Mk5 front suspension.

In May 2007, British Gas signed a landmark deal which saw 1,000 vans being supplied to the firm, which were fitted with a bespoke racking system and a speed limiter, designed by Siemens.

Based on the Caddy Life the Tramper or Camper (Australia) package comes with two seats and a table, a fold out awning that is packaged within the rear tailgate, a bed that is made by folding down the seats measures 1.10 m x 2.0 m, also curtains are standard for privacy, options include a seven-litre cool box.

It is based on the 2.0L TDi model with black 17 inch wheels with 225/45R17 tyres, a new body kit, white body with red trim, black and red leather sport seats, a fire extinguisher under the passenger's seat, a sport leather steering wheel and gear knob.

[21] At the 2008 IAA (Hannover Motor Show), Volkswagen Commercial Vehicles revealed the all wheel drive Caddy 4Motion range teamed with the 1.9 TDI engine and manual transmission.

In 2015, it underwent a second facelift consisting of a new front fascia, roof spoiler and a new interior to keep it competitive alongside its more modern rivals.

[34] Volkswagen Group tuner Abt Sportsline unveiled a battery-electric conversion of the Caddy (Typ 2K) at the IAA 2018 Commercial Vehicle show in Hanover; the ABT e-Caddy is based on the long-wheelbase Caddy Maxi, and is driven by an electric traction motor that develops 82 kW (110 hp) and 200 N⋅m (148 lbf⋅ft) of torque.

The switch to MQB has enabled VW to offer new tech to the Caddy lineup, including Travel Assist, the new oncoming vehicle braking when turning function, connected infotainment systems and digitalized controls.

[41] There is also a five-seat model prepared for camping, with a slide-out kitchenette in lieu of the third seating row of the MPV (Caddy California).

[1]: 8–12 In July 2022, the Volkswagen Caddy received a CNG-powered TGI variant and the Dark Label special edition.

[45][46] The Active trim level features a crossover-inspired look with plastic cladding, aluminum-style skid plates and unique 17-inch wheels.