Volkswagen is working on a cut-price version of the Mercedes-Benz CLS saloon-cum-coupe.

This Passat development mule caught testing in California has a sleeker rear roof line and hatchback tailgate. It also features Volkswagen’s new family face treatment under the disguise.

Due to arrive next year, the Passat coupe will feature a bespoke, luxury interior which is more Phaeton in look and feel than Passat.

The usual petrol and diesel engines will be offered, and there is rumour of a 400bhp turbocharged V6 range-topper using four-wheel drive.