Rumors are circulating that German auto giant Volkswagen will replace the Passat with the company’s New Mid-Sized Sedan (NMS) in the US. The new sedan is expected to hit the market in 2011 and will be manufactured at the auto maker’s Tennessee plant.

It will most probably be longer than the Passat and should be priced with a cheaper price tag (by about $8,000). According to the source, the new sedan will be built in the US so that the automaker can take advantage of the weaker US dollar when compared to the Euro. Thanks to exchange rates, German-built cars will carry a significantly higher price tag when sold in the US hence it would cost lower if the cars were built in the US. It is unclear if the new mid-sized sedan will be offered in other markets.

Generally Americans and Europeans have different expectations of their D-segment sedans. Euro D-segment cars tend to be smaller and sleeker like the Accord Euro while American market cars are just plain large – the bigger the better, refinement is not as important. An unnamed Volkswagen executive has said in the past that the NMS project was born because the company felt American customers don’t really appreciate the refinement of the Passat, hence dismal sales in comparison to competitors like the Camry and the Accord. The Passat is also more expensive because of the extra costs that go into its refinement.