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The K70 was originally developed by NSU as a smaller brother to the more famous Ro 80, the main difference being that the K70 used a conventional piston engine instead of the Ro80's more complicated Wankel rotary engine. The name "K70" referred to the fact that the engine had a power output of 70 brake horsepower (52 kW), the "K" denoting the German word "Kolben", meaning Piston.

In 1969, just as the car was about to be launched, NSU was taken over by Volkswagen, who integrated the Necklarsum company with Auto-Union/Audi which it had acquired in 1964. VW were in desperate need for a new family saloon to replace the unsuccessful Type 4 , which itself was intended to replace the Beetle. Thinking that the K70, featuring front wheel drive and modern styling was the perfect way to transform its image, the Wolfsburg firm quickly scrapped publicity material showing the K70 badged as an NSU, and instead put it into production as a Volkswagen.

Despite the different badging, buyers tarred the K70 with the same brush as its unreliable Ro 80 sister car, leading to poor sales. The K70 also became notorious for serious corrosion problems, and very few have survived as a result. It was replaced, in 1973 by the Audi based VW Passat.