The 2012 Volkswagen America will be larger than the Passat, but less expensive. Volkswagen released this sketch showing the design direction of the new car. See pictures of the 2009 Volkswagen Passat.

Consumer Guide's Impressions of the 2012 Volkswagen America

VW looks past the recession with a new American-focused midsize sedan--and a new U.S. plant to build it. Larger than the Passat but designed to cost less, the "America" aims to be as family friendly--and popular--as the top-selling Honda Accord and Toyota Camry.

What We Know About the 2012 Volkswagen America

Most automakers these days are frantically scaling back and reassessing their futures. Not Volkswagen. Despite the deepening global recession, VW is forging ahead with a new U.S.-built midsize sedan designed for the heart of the American car market. Stefan Jacoby, CEO for Volkswagen Group of America, says the new model--code named NMS for "New Mid-Market Sedan"--will still start production during 2011 at a factory now rising in Chattanooga, Tennessee. Likely to replace the Passat, the 2012 Volkswagen "America" (final name to be determined) will be the first U.S.-built VW in over 20 years.

It may seem foolish to pursue a multimillion-dollar project in a deteriorating economy, but the 2012 Volkswagen America is a carefully calculated risk. For one thing, VW starts with more cash and less debt than most automakers, being one of the few to post both a profit and higher sales in 2008 versus '07. Indeed, the parent VW Group--which also includes the Audi, Bentley and Lamborghini brands--recently passed Ford Motor Company as the world's third-largest automaker by sales (after Toyota and General Motors).

Furthermore, although a lately stronger dollar has erased some of the cost advantage that prompted the new U.S. plant, VW believes the move must pay off eventually. That's because the greenback is likely to weaken again once the economy recovers due to inflationary pressure from the government's various king-size stimulus measures that only add to an already towering national debt.

Lastly, VW still wants to unseat number-one Toyota by 2018 when it hopes to double sales to 10 million globally and to around one million in the U.S. Officials believe the main way to get there is with new vehicles that are not only more profitable because they're cheaper to build, but also more marketable because they're tailored to specific audiences. VW has finally clued-in to a big reason for the long-running U.S. success of the Toyota Camry and Honda Accord, which are not only built locally but also customized for this market, whereas most VW's have been resolutely Euro-centric.

While it remains to be seen just how "American" this new German design will be, we do have some hard facts about it, thanks in part to recent hints from VW itself. For starters, the 2012 Volkswagen America will be priced between today's midsize Passat and VW's compact Jetta, but will be larger than Passat. That's in line with the NMS mission statement and suggests a close dimensional match with Camry and Accord, which we've used to estimate the measurements in our specifications table.