For 1996, Volkswagen continued to add tweaks to its Passage GLX and GLS sedans and wagons, and introduced a diesel version, called the TDI (turbo direct injection), later in the production year.

The entry-level Passat GLS four-door sedan came with a less-than-powerful 2.0-liter in-line 4-cylinder engine that generated 115 hp, while the higher-end GLX, available as both a sedan and a wagon, was powered by a more appropriate 2.8-liter V6 engine that pumped out 172 hp. The turbodiesel, aimed at those who sought better gas mileage, was equipped with a 1.9-liter, 90-hp 4-cylinder engine. It also was available in both sedan and wagon versions.

All engines were linked to a five-speed manual overdrive transmission, which was standard. A four-speed automatic was available as an option on the GLS and GLX.

In an effort to increase the Passat's safety features, daytime running lights were added in '96. Other standard features included front airbags for the driver and passenger, heated exterior mirrors, CFC-free air conditioning, power brakes, power steering, power windows, power door locks, cruise control, an audio anti-theft alarm system, and an eight-speaker AM/FM/cassette audio system.

The GLX trim package added anti-lock brakes and traction control; leather seats were available as an option.

While drivers noted that they enjoyed the car's handling, styling, roominess, and comfort, many reported numerous problems with the car, including the fact that "fit and finish" items such as door handles broke way to easily, resulting in expensive repairs.