In the early 1960s Volkswagen Australasia Ltd. began work on a new vehicle for use by the Australian Army that could also be sold to the general public.

[2]: 65  Design of the car was handled by project head Rudi Herzmer, who was also Volkswagen Australasia's Managing Director, and Engineer Cyril Harcourt at VW Australia's Clayton factory.

[4] When Herzmer, who had accompanied the prototypes, arrived in Germany with the cars he discovered that VW had begun development of a similar vehicle that would become the Volkswagen 181.

[3] Volkswagen Germany gave approval for the project to go ahead, subject to the incorporation of a list of required changes.

The company posted a loss of $2.6 million for the year, and fell to sixth in sales volume behind Toyota.

They identified the high level of investment needed to qualify for the Australian government's "Plan A" requirement of 95% local content as a reason that the product line was not keeping up with changes coming from Germany.

They recommended withdrawal from "Plan A", cessation of all local manufacturing and conversion of the Australian division to assembly of cars supplied from German plants in Complete Knock Down (CKD) form under the Australian "SV Plan", that only required 60% local content.

Production stopped in September or October 1968, but the factory continued to supply CKD kits until the existing inventory of parts was used up, which lasted until 1970.

[6] A registry of Country Buggies lists 363 vehicles, many of which are recorded as having been scrapped or of unknown location.

[7] The Country Buggy was built on an Australian-made Type 1 chassis, which the company described as a "tubular centre section frame with welded-on platform".

Apart from the smaller engine, available options included a soft top, a hard top, side curtains, winter tyres, interior sun visors, an external rear-view mirror, an engine guard, a front towing eyelet and a power take off.

[10] Due to import restrictions the vehicles were shipped in CKD kit form, with final assembly done by DMG.

After Australian production of the Country Buggy stopped the supply of kits for the Philippine market continued for a time but was eventually exhausted.

[12] In April 1972 it was announced that four major automobile manufacturers would be making significant investments in Philippine auto production.

The announcement stated that Volkswagen would invest over US$6,000,000 in a joint venture with DMG Inc. to build a car called the Sakbayan 817.

[15] Philippine advertising for the Sakbayan described it as an "All-Around" vehicle and used the slogan "It combines the stamina of a truck with the economy of a small car".

[16] Other differences included the former Beetle-sourced headlamps having been replaced with units that were slightly inset, and the availability of a new hardtop.