Volkswagen's new Passat sedan is intended to be an upscale vehicle offered at a competitive price, a version with extra features that can still be purchased by everyday consumers.

"This is a car that aspires to be a premium model without a premium price," said Volkswagen CEO Martin Winterkorn, as quoted by the Wall Street Journal.

"The Passat is going to give a boost to the entire VW brand," Winterkorn said while unveiling the updated sedan at the VW design center in Potsdam, Brandenberg, Germany.

Volkswagen's No. 2 best-seller, the Passat has been competing with BMW's 3-series as well as the Mercedes-Benz C-Class sedan, both of which are lower-priced premium models.

The updated VW sedan, which holds a 5.3-liter, 240-horsepower turbo diesel engine, starts at €25,900 ($35,200), reflecting a €500 increase over the current model.

"I am convinced that the new Passat will certainly be a little top-of-the-line model," said Heinz-Jakob Neusser, the VW brand-development chief, as quoted by WSJ.

While sales have slowed for European sedans, VW should make more profit on Passat models thanks to new manufacturing methods that save on costs, Forbes reported.

The Passat may not boost VW sales in Europe, but the model should fuel demand in China, Automotive Industry Data Editor Peter Schmidt predicted.

"Much more significant (than Europe) is demand in China. Just as Americans like cars with boots (trunks), last year VW sold 230,000 Passats and another 190,000 Magotans (Passat with Magotan badge) in China. I wouldn't be surprised if they do that again. And then there's Eastern Europe and Russia, and the cheaper version sold in the U.S. VW could sell at least 1.3 million Passats in a year," said Schmidt, as quoted by Forbes.

Volkswagen, which sold around 1.1 million Passats last year, plans to expand in China by building two factories in the country this year.

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