The 1989 Volkswagen Vanagon was essentially the same vehicle as the previous year's model, with the exception of a few distinguishing characteristics, such as black window molding instead of chrome and the fact that VW introduced a new trim package called the Carat. The '89 Vanagon was equipped with a water-cooled 2.1-liter four-cylinder engine that generated 90 horsepower and included a fuel-injection system called the Digifant.

A four-speed manual transmission was standard, while a five-speed manual was standard on trim packages that included VW's Synchro all-wheel-drive system. A three-speed automatic transmission was optional. The rear-wheel-drive or four-wheel-drive vehicle was also equipped with rack-and-pinion steering, power-assisted brakes, and front and rear independent suspension.

In addition to the new Carat version, the Vanagon was available in a number of trim packages, including the Vanagon GL, the GL Camper, and a limited-edition GL Wolfsburg Edition.

Standard features for the Vanagon GL included deluxe front bucket seats, velour upholstery, carpeting, tinted glass, a rear window defogger, and a padded instrument panel. The GL Camper added a stove, sink, refrigerator, storage cabinets, and folding stow-away tables, while the Carat added power heated mirrors, a rear window wiper, a front spoiler, and color-coordinated bumpers and rocker panels. The Wolfsburg Edition also added power heated mirrors, privacy curtains, a front spoiler, and color-coordinated bumpers and rocker panels.

While most drivers agree that the Vanagon was fun to drive, as well as roomy, versatile, and convenient, they also note that some vehicles needed frequent repairs, which could be expensive.