Why is the engine in the back of a VW Beetle?

Answer 1

Traction is one reason, as the engine and transmission are on top of the drive wheels. Another reason was that the engine and transmission could be built, installed, and replaced as a packaged unit. That also freed up more room for the occupants. The rear engine location allowed for the frontal area of the car to be lowered, giving the car a more (for the 1930's) aerodynamic shape. The car needed all the aerodynamic help it could get, as it was intended to carry 2 adults, 2 children, and their luggage down the road at 100km/h on a budget, all with Depression Era technology.

The drawbacks to rear engine designs include: 1) Poor engine access. 2) Tricky handling at the vehicle's limits unless there is careful engineering and suspension setup. 3) More involved linkages for transmission and engine controls. 4) As the front wheels turn side to side for steering, the front wheel wells must be big enough to accommodate them, leaving less room for the fuel tank, spare tire, and luggage.

Those drawbacks became less acceptable in economy cars as time went on, for advances in constant velocity axle joints enabled engineers to economically mount engine and transmission over the front driven wheels, giving compact cars rear engine-like traction, but with more luggage room, more forgiving handling, and better engine access.