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In 1967, Volkswagen Australasia Ltd. started with a project vehicle designed for Australia's rough conditions. This vehicle, designated Country Buggy or Type 197, was designed by project head Volkswagen Australasia's Managing Director Rudi Herzmer and VW Engineer Cyril Harcourt in VW Australia's Clayton factory.

The Country Buggy was based on an Australian-made Type 1 platform with engine, gearbox and front axle from the Type 1. The rear swing axles had reduction gears from a 1st generation Volkswagen Transporter (1950–1967).

Originally, the idea was to make the Country Buggy an amphibious vehicle, however directives from VW Germany curtailed this vision.

The Country Buggies in the Philippines were marketed as the Sakbayan, a portmanteau of the Tagalog words "sasakyan" (vehicle) and "bayan" (nation, country, or people), and reflects the name of Volkswagen meaning "people's car" in German. In the Pam Grier film Black Mama, White Mama, several Country Buggies were seen as police vehicles. These were in fact the Sakbayans, as the filming location took place in the Philippines.

VW Australasia's Country Buggy also caught the attention of the chief heads in Wolfsburg, and one or two were sent to Wolfsburg for evaluation. In reality, VW was developing their own Country Buggy competitor, the Volkswagen 181.

A Country Buggy with a canvas awning style roof can be seen very clearly in an Australian Coca Cola commercial from 1969 featuring an Australian band called "The Executives"

The Country Buggy was not a big success. It had some early reliability problems which doomed it, as well as it being ahead of the market trend of the day.

Production ended in 1969 with only 1956 units built. Very few Country Buggies survive today, but Sakbayans are being restored in the Philippines following increasing interest in the original Volkswagen Beetle.