According to AFX News, VW's working with Chinese automaker Shanghai jv, the company they've got a 50-50 joint partnership with for China sales, to develop a replacement for the Passat lineup:

"Volkswagen Group said it has signed an agreement with one of its China joint ventures, Shanghai Volkswagen, to jointly develop a new car as a replacement model for its Passat brand.

'It's the first time for the venture to take a role in the development work of a car sold to the international markets,' the German automaker said in a statement.

It said that the new car, which is expected to be launched as early as 2009, will be developed mainly for the North America and China markets."