Volkswagen's new mid-sized sedan, the one to be build in Chattanooga, Tenn., will by all accounts be bigger and cheaper than the Passat it will replace. It might even be called the Passat, though John White, president and CEO of VW Canada, says the name won't be announced for months, yet.
By the way, VW will produce a replacement for the current Passat and sell it in other global markets. But the European-bred Passat is too small and too pricey to be competitive with mid-sized segment stalwarts such as the Toyota Camry, Honda Accord, Ford Fusion and Hyundai Sonata.
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Prices for the Camry sedan start at $24,900, and the Accord starts at $24,790. The Fusion has a base price of $22,799 and the 2011 Sonata has a base price of $22,649. By contrast, a VW Passat with a 2.0-litre turbocharged engine starts at $27,775. Surely VW's new family sedan will need to start below $23,000 in this highly competitive segment - especially with thousands of dollars in discounts sloshing around the marketplace.
To get the price down, VW is going with a purely North American production strategy:
- VW will obtain at least 85 per cent of the sedan's components in North America. Local sourcing allows VW to avoid currency fluctuations that can drive up the cost of parts.
- VW will also share 30-to-40 per cent of the mid-size sedan's parts with the Jetta, which is built in Puebla, Mexico.
- VW's new mid-size sedan is also being designed with fewer frills. This car will not be aimed at a somewhat premium buyer with European sensibilities. Price-sensitive North American consumers will be served with a larger, but more basic car.