Volkswagen introduced its new, larger Type 3 in 1961 and the Type 3-based Type 34 Karmann-Ghia was soon added to the product line. More information on the Type 34 is here (scroll down).
Type 34s were fairly expensive, but to my mind the reason they sold poorly was the styling. Bear in mind that the original Karmann-Ghia is widely considered to be a classic design, so matching its quality would have been difficult. The Ghia stylists instead opted for a considerably different theme based roughly on the "three box" format that was into its long design fashion reign. That in itself was not necessarily a problem. What went wrong was the detailing.