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They started making watercooled VWs in 1970, but the first watercooled VW sold in the US was the Rabbit, which was introduced to the US in 1974. In 1983, the Vanagon was changed to a watercooled engine called the "Wasserboxer." ("Wasser" is German for Water, naturlich.)

Now, as to this Wasserboxer engine: I have NO idea why they came up with this. The engine has picked up the unfortunate nickname "Wasserleaker" because...well, they all do. The Diesel Vanagon used the Rabbit engine, so I don't know why VW didn't use the gas Rabbit engine in a gas Vanagon. (However, YOU don't have to be so encumbered: quite a few guys have changed Diesel Vanagons to Rabbit gas engines. It is a fairly easy change if you are a good mechanic, but you need to change the transmission to a Gas Vanagon one because the diesel transmission is geared very low.)

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