Volkswagen introduced the Karmann-Ghia coupe at the Kasino Hotel in Westfalia, Germany.
As the European car market finally recovered from the war, Volkswagen felt that it needed to release an "image car" to accompany its plain but reliable "Bugs and Buses."
Volkswagen was not the only automotive company looking for a flagship car at the time. Chevrolet had released the Corvette, and Ford the Thunderbird. The Chrysler Corporation had contracted with the Italian design firm Ghia to create designs for a Chrysler dream car; however, none of the designs came to fruition.
Meanwhile, Volkswagen had contracted with German coach-builder Karmann for their own image car, and Karmann, in turn, had sub-contracted to Ghia for design offerings. Eventually Ghia supplied Karmann with a version of their Chrysler design, modified for the floor plan of the Volkswagen Beetle. The Karmann-Ghia was released as a 1956 model by Volkswagen. The car's sleek lines and hand craftsmanship attracted the attention Volkswagen had hoped for.
Nevertheless, as sporty as the Karmann-Ghia looked, it suffered from its 36hp flat four engine in the area of power. Still, the Karmann-Ghia sold 10,000 units in its first full production year ,and with the release of the convertible in 1958, production reached 18,000 units for one year. Sales climbed steadily through the 1960s, peaking at 33,000 cars per year.
While General Motors and Ford focused on their Corvette and Thunderbird, respectively, Volkswagen found that the Bug had increased in popularity, especially in the U.S. market. Executives decided to focus their marketing attention on the Bug, abandoning the Karmann-Ghia, which was last produced in 1974.