With reduced earnings, Volkswagen entered the first postwar recession in 1966/67, which ended an exceptional and unusually long phase of prosperity, heralding the return to normal economic conditions. The declining demand on the domestic market forced the company to reduce the number of vehicles manufactured in 1967:
The production of the Beetle was cut by 14 percent and the VW 1500 was decreased The Golf did not kill Beetle production, which continued in smaller numbers at other German factories until 19 January 1978, when the main production shifted to Brazil and Mexico, markets where low operating cost was more important. The last Beetle was produced in Puebla, Mexico, in mid-2003.
The last 3,000 Beetles were sold as 2004 models and badged as the Last edition, with whitewall tires, with unique characteristics and the choice of two special paint colors taken from the New Beetle. Production in Brazil ended in 1986, then started again in 1993 and continued until 1996. Volkswagen sold Beetle sedans in the United States until August 1977 (the Beetle convertible a.k.a. Cabriolet was sold until January 1980) and in Europe until 1985, with private companies continuing to import cars produced in Mexico even after production of the beetle had ended.
The Beetle lasted longer than most other automobiles which had copied the rear air-cooled engine layout such as those by Subaru, Fiat, Renault, General Motors and Tatra)'s limousines, which ended production in 1999. By 2003 Beetle annual production had fallen to 30,000 from a peak of 1.3 million in 1971. On 30 July 2003, the final original VW Beetle (No. 21,529,464) was produced at Puebla, Mexico, some 65 years after its original launch, since 1945, the year VW recognizes as the first year of non-Nazi funded production. VW announced this step in June, citing decreasing demand.
The last car was immediately shipped off to the company's museum in Wolfsburg, Germany. In true Mexican fashion, a mariachi band serenaded the last car. In Mexico, there was also an advertising campaign as a goodbye for the Beetle. For example, in one of the ads was a very small parking space on the street, and many big cars tried to park in it, but could not. After a while, a sign appears in that parking space saying: “It is incredible that a car so small can leave such a large void”. Another depicted the rear end of a 1954 Beetle (year in which Volkswagen first established in Mexico) in the left side of the ad, reading “Once upon a time...”) and the last 2003 Beetle in the right side, reading “The end”. There were other ads with the same nostalgic tone. The Fade Away (1970-1979)
The engine grew again for 1970 hitting 1.6 liters. Car and Driver tested a '70 Beetle equipped with the Automatic Stick Shift and wasn't overly impressed. "The acceleration tests were disappointing," it wrote, " It's entirely possible you won't be able to feel it either, but can read it on the specification page. For reasons best known, and perhaps only known, to Wolfsburg, the test car was slightly slower than an identically equipped 1968 model previously tested.
As to the chassis, Car and Driver reported, "Where old Beetles liked to tuck a wheel under and go belly up in the ditch, the new ones slew around corners in an almost predictable fashion. We pronounce the suspension an unqualified improvement." In conclusion, the magazine wrote, "The VW's popularity isn't what it used to be. Volkswagen is still the largest selling import by a four-to-one margin over its closest competitor, Toyota, but its share of the business has dropped considerably.
In 1965, VW enjoyed 67 percent of the import market, but last year it dropped below 50 percent. We wouldn't want to be accused of crying wolf or anything like that, but if this continues, along about 1987 Bruce Meyers and everybody following in his footsteps will have to start looking somewhere else for parts."
For 1971 the Beetle got yet another radical suspension change to create the "Super Beetle" model, since the '40s doubled the luggage space. The Super Beetle's output from the 1.6-liter engine was now a full 60 hp. The plant in New Zealand that assembled the Beetle ceased production during this model year — the start of a trend.
Changes were minimal as VW's engineering resources were directed to other, ultimately core vital and water-cooled, projects. In 1974, the Wolfsburg plant, which was being changed to produce the front-drive Beetle replacement called the Golf (initially sold as the Rabbit in the U.S.), stopped producing Beetles. If anyone doubted the Beetle's days were numbered, they weren't paying attention. Production for the U.S. was now coming from VW plants in Emden and Belgium with other plants around the world still producing a high number of Beetles out for local consumption. However, the Super Beetle convertible continued as an icon of chick girl style through 1979.
That was that for the Beetle in the United States. But it wasn't the end of the Beetle. The new beetle evolves times past yet remains timeless still stirring the emotions and communicating with owner’s drivers and anyone who see it. The new Beetle remains distinctive, unique and recognizable, but with a more powerful appearance and a more powerful base engine.