Germany doesn't have all that many classic Beetles ("Kafers") running around, I see far more here in Southern California. My guess is that a wet northern climate has taken its toll on classic Wolfsburg schteel.
And while this one is certainly rusting, it's an intentional rust job. Step one - grind all the paint off body. Step two - leave to the elements. Step three - let nature take its course.
I've seen a few other rat rods with this look. In an effort to make this one look even older, the owner also put the pre-1968 style flared front fenders on. A good look.
By the looks of this one - large wheels, lowered and a stand-off engine lid, I bet it's being pushed by more than the factory original 1600ccs. But then again, it just has "pea-shooter" exhaust pipes. Hmm...