A number of exterior features distinguished the 1988 Volkwagen Vanagon from its predecessors. Those features included larger Volkswagen logos on the vehicle's front and rear, new black bumpers, and a lowered ride height. The '88 Vanagon came with a 2.1-liter water-cooled four-cylinder engine that generated 90 horsepower. The engine used a fuel-injection system called the Digifant.

A four-speed manual transmission was standard, while a three-speed automatic was optional. The rear-wheel-drive vehicle was also equipped with rack and pinion steering, power-assisted brakes, and front and rear independent suspension.

The Vanagon was available in a number of different trim packages, including the Vanagon GL, the GL Camper, and a limited-edition Wolfsburg Edition.

Standard features for the Vanagon GL included deluxe front bucket seats, velour upholstery, fold-down armrests for the front and middle-row seats, carpeting, a lockable glove box, and an illuminated vanity mirror. The GL Camper added a stove, sink, refrigerator, storage cabinets, and folding stow-away tables, while the Wolfsburg Edition added heated exterior mirrors, color-coordinated bumpers and rocker panels, and power door locks.

Drivers tended to be loyal to the Vanagon, citing its fuel economy, cargo space, and uniqueness as positive points. But they also noted that repairs and parts could be expensive.