What kind of engine will fit 1970 volkswagen beetle engine bay?

the vw engine isnt too bad on gas, the 1600 gets aroung 25mpg.if you want you can find a trans with a better gear ratio to get better gas milage.

There are adapter kits for lots of engines to the VW transaxle. Everything from Subaru to small block V-8s have been put in. Even the rotary engines have adapters to run in VW's. (A popular conversion years ago was to the air cooled Corvair engines.) For fuel economy, the air cooled bug engine isn't bad. It's big weakness was lack of power. You can build it to give great power, but that also shortens its life considerably. (Not to mention having to build the transaxle to handle the power.) My favorite is the Subaru 1600-1800cc conversion. That conversion goes from a 40hp air cooled to a 100+ water cooled engine that actually uses less fuel. Of course any of the water cooled conversions require mounting a radiator. (Easy to hide in a bus, but very visible in a bug.) If economy is the point, how about a VW diesel from a VW Rabbit? Great fuel mileage and about the same power as the stock engine. Make sure that you check the engine rotation direction. It must match the old engine's rotation direction or you will have 4 reverse gears and 1 forward! The older pre-IRS transaxles could be reversed by swapping the spider gear housings in the output shaft sides of the transaxle. Some engines such as the Corvair flat 6 actually had reversing cams available to reverse the direction of the engine's rotation. I had a 140 hp Corvair engine with the reversing cam in my 70 bus. From behind it looked stock except for the large header tubes sticking out and the big orange FRAM oil filter visible under the bumper. It wouldn't do wheelies, but would lift to the top of the shocks on takeoff and surprised many a Camaro, or Mustang owner at a red light.