Volkswagen prices U.S.-market Passat $7,000 cheaper than previous model, much less than Europe's smaller Passat but import costs can be overwhelming.

VW has shaved more than $7,000 off the price of the U.S.-market 2012 Passat compared to the 2010 model - the last Passat model sold in that market.

Prices for the 2012 Passat begin at $20,765, shipping included. The 2010 Passat had a starting price of $27,945.

The entry-level U.S. Passat comes with a 2.5-liter five-cylinder engine producing 170 bhp (127 kW / 172 PS) and 177 lb-ft (240 Nm) of torque mated to a standard five-speed manual transmission or an optional six-speed automatic.

"Our intention with this Passat is to broaden the appeal to more customers," says Christian Klingler, the VW brand's director of global sales and marketing.

The new North American Passat is also much larger than the previous model, which was the same size as the European-spec Passat, which stays the same.

Also, to make the model even more competitive in the largest and most crowded U.S. car segment, the Passat will be the only mid-sized sedan to offer a diesel variant - the 2.0 liter TDI with 140 bhp (104 kW / 142 PS).

But don't try importing the U.S.-market Passat to Europe, says VW, even if the savings can seem big on the face of it.

For example, the North American Passat SE with the 2.0 liter TDI goes for $25,995 (about €18,500). A comparably outfitted European Passat (and one that is even smaller) sells for around €30,000 Germany.

Sounds great until you add up all the costs of importing the car from the United States into Germany including more than €4,000 in import sales taxes, around €2,000 in separate customs duties, refitting the lights to meet European regulations as well as passing an inspection which adds up to another €5,000.


And that doesn't include other transportation and test costs.

But are the two models even the same? Maybe it is true that in a free-market system, you get what you pay for.