New sedan will be larger and cheaper than the Passat it replaces in order for VW to become competitive in the mid-sized sedan segment in the United States - the largest for passenger cars.

Volkswagen's still unnamed new mid-sized sedan (NMS) has been caught testing in the United States southwest region as it gets closer to its debut date.

The NMS is caught here doing some hot-weather testing in the desert, with two prototypes, one pulling a U-Haul trailer while we can spot the Arizona plates on the other. In these shots we can see how the NMS will be larger than the Passat model it replaces in the U.S. market, although it's still keeping the Passat's general shape.

VW has to be more competitive in this mid-sized sedan segment, the largest for passenger cars in the United States market, which is led by the likes of the Toyota Camry and Honda Accord. VW not only had to make a larger sedan but a cheaper one too. Prices for the NMS will start at around $20,000 as opposed to $28,000 for the Passat which is built in Europe. The new NMS will be assembled at a new plant in Tennessee that VW has built there to keep production costs down.

The objective is to sell 100,000 units a year of the new sedan. A very ambitious goal considering that VW sold less than 214,000 cars in total in the United States in 2009.

VW is also developing a smaller sedan for the U.S. market based on the current Jetta, which will also grow in size and be made at the Tennessee plant.

The VW Passat will remain in the VW lineup in Europe, with a "next-generation" version expected to debut in 2011.