CHATTANOOGA, TN – The response was underwhelming when Volkswagen unveiled its eagerly awaited all-new U.S.-built Passat midsize sedan at the North American International Auto Show in Detroit in January.

Journalists accustomed to expensive German engineering and scintillating design expected to be dazzled by the most important new vehicle to arrive from Wolfsburg since the New Beetle in 1998.

Instead, they got a car that is more vanilla than chocolate. Decadent German strudel it’s not. The new Passat is not drop-dead gorgeous, but neither is it devoid of character.

And that’s exactly where Germany’s No.1 auto maker wants to be with the Passat.

Styling aside, VW has done a tremendous job cutting a whopping $7,000 off its base price while delivering a spacious family-friendly sedan that is fuel-efficient, well built and fun to drive. Fears that the new car compromises the Passat’s German-ness prove unfounded.

Volkswagen has never been a contender in the high-volume midsize-car segment in the U.S. The Passat arrived in Europe in 1973, but the nameplate did not come to the U.S. until 1990. Its best year was 2002 (96,142 deliveries).

That sounds respectable, except that nine other cars dusted the Passat that year in Ward’s Upper Middle car segment. The Chevy Impala and Toyota Camry outsold it 2-to-1 and nearly 4-to-1, respectively.

The Passat’s luge-like slide over the next several years left the car marginalized. When VW’s sleek and sporty 4-door CC (Comfort Coupe) launched in 2008, it sealed the coffin of the aged Passat.

For the past two years, the CC has outgunned it more than 2-to-1 as dealers clear out inventory of the previous Passat, which ended production last fall.

The mechanical bits of the new Passat work just fine, so styling likely will mark the beginning of most discussions about the car.

The classic 3-box design carries forward many of the cues of the Phaeton flagship sedan, which hasn’t been available in the U.S. since 2006.

Side by side, the Passat and Phaeton have similar 3-bar horizontal grilles and headlamps, but the Passat has a more steeply raked windshield and less chrome.

To draw such a comparison between the two vehicles is positive for the Passat, because the starting price for a Phaeton with V-8 was about $67,355 before it left the U.S. Meanwhile, VW is promising a base price of about $20,000 for the new Passat.

Making good on that vow will go a long way in boosting the Passat’s prospects. For years, VW was wedded to the notion that German engineering is worth a premium. But ironically, at least in the U.S., the “people’s car” was too expensive for most people.

The new Passat demonstrates VW’s willingness to simplify the design, remove build configurations (from 128 down to 16) and take out some costly options en route to a vehicle whose starting price will massively undercut the $27,195 base sticker of the smaller outgoing car.

Part of the cost difference comes from building the ’12 Passat at an all-new assembly plant here, which is less expensive (and less currency-sensitive) than doing so in Mosel or Emden, Germany. Fewer build configurations and reduced shipping time mean customers will get their vehicles much more quickly.

It’s too bad it’s taken VW so long to realize buyers in the high-volume midsize segment want value and reliability more than finely tuned suspensions and exhaustive design and engineering.

’12 Volkswagen Passat
Vehicle type Front-engine, FWD, 5-passenger, 4-door sedan
Engine 2.5L DOHC MPI inline-5; iron block/aluminum head
Power (SAE net) 170 hp @ 5,700 rpm
Torque 177 lb.-ft. (240 Nm) @ 4,250 rpm
Transmission 6-speed automatic
Wheelbase 110.4 ins. (280 cm)
Overall length 191.6 ins. (487 cm)
Overall width 72.2 ins. (184 cm)
Overall height 58.5 ins. (149 cm)
Curb weight 3,221 lbs. (1,461 kg)
Base price About $20,000
Fuel economy 22/31 (10.6-7.6 L/100 km)
Competition Honda Accord; Toyota Camry; Nissan Altima; Chevy Impala and Malibu
Pros Cons
Resembles expensive Phaeton Ho-hum sheet metal
43 mpg TDI highway rating VR6 power outdated
Interior comfortable, quiet Center stack too much like Jetta

The most aggressively styled entries in the segment – Mazda6, Subaru Legacy and Dodge Avenger – barely make a blip, while more conservative designs such as the Camry, Chevy Malibu and Impala, Honda Accord and Nissan Altima each sold at least 172,000 units in 2010, according to Ward’s data.

Can you blame VW for wanting a piece of that action? A base price of $20,000 undercuts the Malibu, Accord and Altima and puts it squarely against the Camry, Mazda6 and smaller, strong-selling Ford Fusion and Hyundai Sonata.

This is not dumbing down German design. This is smartening up the bottom line.

For clues behind Wolfsburg’s motivation, look at the Jetta. Its sales have been on a downward trajectory since 2002, when 145,604 were delivered.

A new less-expensive Jetta launched last year and was bashed by critics for dull sheet metal, a downmarket interior and uninspired handling. Clearly, those reviews were ignored because the Jetta is on pace for a record sales year, easily surpassing 150,000 units.

Three excellent engines are available in the new Passat: a 170-hp 2.5L 5-cyl., a 280-hp 3.6L VR6 V-6 and the 140-hp 2.0L TDI Clean Diesel. These DOHC powerplants are not new and appear in the Golf, Jetta and, in the case of the VR6, the CC.

Normally we might rail on an auto maker for using carryover engines in a new high-stakes vehicle, but the strategy makes sense in this case.

The VR6 was not available at the press launch here, but its credibility is long established, even though its horsepower and 258-lb.-ft. (350-Nm) torque rating lag newer gasoline direct-injection V-6s.

VW predicts the 2.5L I-5 will be the most popular engine – and the least expensive. Paired with a 6-speed automatic transmission, the 2.5L is surprisingly stout and even sporty when shifting manually. A 5-speed manual transmission is standard.

Power is more than adequate for passing, and the engine never sounds or feels overly taxed by the vehicle’s 3,221 lbs. (1,461 kg). This I-5 compares favorably with 4-cyl. engines deployed in other midsize cars.

VW made a concerted effort to reduce mass at every corner. Despite being 4 ins. (10.2 cm) longer than the old Passat, the new model also is 110 lbs. (50 kg) lighter.

The TDI represents the new Passat’s sharpest competitive edge, devastating the segment with a city/highway fuel-economy rating of 31/43 mpg (7.5-5.5 L/100 km).

A Ward’s 10 Best Engines winner the past three years, the 2.0L TDI is deliciously torquey and supremely smooth, injecting the U.S. midsize car segment with a European sophistication that has been lacking since the previous Passat TDI was discontinued five years ago.

Mated to VW’s spectacular 6-speed DSG dual-clutch transmission, which is optional, the Passat is everything a buyer in this segment could ever want: efficient, quiet and thrilling.

Our test drive from here to Nashville yields 41.5 mpg (5.6 L/100 km), unheard of in this class.

Is there another non-hybrid midsize car capable of such mileage? Not by a long shot. Even the ’12 Buick LaCrosse with eAssist, a mild hybrid that trumps many rivals in fuel economy, becomes less compelling, rated at 25/37 mpg (9.4-6.3 L/100 km).

Pricing for the DSG TDI has yet to be released, but it won’t be cheap, especially because the Passat uses a Selective Catalytic Reduction system that requires a urea tank to be replenished in order to meet emissions requirements in all 50 states.

The smaller, lighter Jetta TDI can meet emissions requirements without resorting to a complex SCR system, which saves cost. For the Passat, VW recommends replenishing at regular service intervals every 10,000 miles (16,093 km), although the range is approximately 15,000 miles (24,140 km).

The service is covered under Volkswagen’s no-charge 3-year/36,000-mile (57,935-km) carefree maintenance program. Yes, the TDI adds to the Passat’s sticker, but the ability to stop for fuel only once every 800 miles (1,300 km) is worth the price of admission. As gasoline prices continue rising, the Passat TDI’s prospects improve.

The gasoline 2.5L I-5 is no slouch, either. Some journalists preferred its high-end torque over the diesel; we managed 29 mpg (8.1 L/100 km) with the I-5 during our drive.

The suspension geometry carries over from the old Passat: The rear axle is acoustically decoupled from the body and benefits from a 4-link independent setup with telescopic shock absorbers, while the front suspension consists of MacPherson triangular wishbones, coil springs and a stabilizer bar.

During our mostly highway driving, the suspension strikes the proper balance between tightly sprung and comfortably pliable. In hard braking, the car remains flat, resisting the urge to nose-dive.

The fully hydraulic steering system feels just right, providing more feedback from the road than the best-selling Camry and Accord.

Inside, the Passat is well conceived and executed. Legroom and headroom are ample; colors are appealing; materials are soft; and the steering wheel feels substantial.

The smooth seamless instrument panel, similar to that of the new Touareg flagship cross/utility vehicle, creates a soothing, luxurious atmosphere. Suede inserts in the firm, comfortable seats provide a unique touch and additional grip.

Appointments are straightforward but not plain or down-market. The center stack design concept carries over from the new Jetta.

Also available is a new 400-watt Fender premium audio system, designed exclusively for VW by the renowned producer of amplifiers and guitars.

The package uses nine speakers that employ proprietary Panasonic technology. The system performs as billed, bringing the raw emotion and granular clarity of a live performance inside the cabin.

There is no plan at this point to introduce a wagon version of the Passat for the U.S., but the CC will co-exist with the new sedan for the foreseeable future. That’s a smart strategy for retaining customers who want more purposeful styling.

The new Passat goes on sale in the U.S. in September, while the plant here will begin exporting salable units to Mexico next month.

The best attribute of the all-new Passat is its ability to satisfy the needs of most American car buyers.

VW predicts the Passat will sell in volumes similar to that of the Jetta. Succeeding will be a monumental achievement for the auto maker, which has been a non-player in midsize cars for nearly a decade.

To go from 12,000 units to more than 150,000 in the span of two years not only upsets the midsize apple cart, it sends it barrel-rolling down Lookout Mountain and positions VW once and for all with a midsize car for the masses.

tmurphy@wardsauto.com