This second-generation Type 2 lost its distinctive split front windshield, and was slightly larger and considerably heavier than its predecessor. Its common nicknames are Breadloaf and Bay-window, or Loaf and Bay for short.[2] [3] At 1.6 L and 48 DIN hp (35 kW), the engine was also slightly larger. The new model also did away with the swing axle rear suspension and transfer boxes previously used to raise ride height. Instead, half-shaft axles fitted with CV joints raised ride height without the wild changes in camber of the Beetle-based swing axle suspension. The updated Bus transaxle is usually sought after by off-road racers using air-cooled VW components.

The T2b was introduced by way of gradual change over three years. The 1971 Type 2 featured a new, 1.6 L engine with dual intake ports on each cylinder head and was rated at 50 DIN hp (37 kW). An important change came with the introduction of front disc brakes and new wheels with brake ventilation holes and flatter hubcaps. 1972's most prominent change was a bigger engine compartment to fit the larger 1.7 to 2.0 L engines from the VW Type 4, and a redesigned rear end which eliminated the removable rear apron. The air inlets were also enlarged to accommodate the increased cooling air needs of the larger engines.

This all-new, larger engine is commonly called the Type 4 engine as opposed to the previous Type 1 engine first introduced in the Type 1 Beetle. This engine was called "Type 4" because it was originally designed for the Type 4 (411 and 412) automobiles. They used the "Type 1" engine from the Beetle with minor modifications such as rear mount provisions and different cooling shroud arrangements. The "Type 3 so called pancake" 1500 and later 1600 cc engines used in Type 3 notchback, fastback and squareback cars, plus the Type 34 Karmann Ghia, were never used in Type 2 vans or buses. The pancake nickname came from its low overall height due to mounting the cooling fan on the end of the crankshaft, a technique later employed for the Type 4 engines. European vans stuck with the upright fan Type 1 1600 engine even after the Type 4 motor became standard for US Type 2 export models.

In the Type 2, the VW Type 4 engine was an option for the 1972 model year onward. This engine was standard in models destined for the US and Canada. Only with the Type 4 engine did an automatic transmission become available for the first time in the 1973 model year. Both engines displaced 1.7 L, rated at 66 DIN hp (49 kW) with the manual transmission and 62 DIN hp (46 kW) with the automatic. The Type 4 engine was enlarged to 1.8 L and 68 DIN hp (50 kW) for the 1974 model year and again to 2.0 L and 70 DIN hp (52 kW) for the 1976 model year. The 1978 2.0 L now featured hydraulic lifters, eliminating the need to periodically adjust the valves as on earlier models. The 1975 and later U.S. model years received Bosch L-Jetronic electronic fuel injection as standard equipment; 1978 was the first year for electronic ignition, utilizing a hall effect sensor and digital controller, eliminating maintenance-requiring breaker points. As with all Transporter engines, the focus in development was not on power, but on low-end torque. The Type 4 engines were considerably more robust and durable than the Type 1 engines, particularly in transporter service.

This bus is a very well preserved Vanagon out of North California