Volkswagen is just days away from naming the location for its new U.S. plant, most likely to be in Huntsville, Alabama, which is expected to open in late 2010 with a capacity of 200,000 to 250,000 vehicles. While there have been reports that VW is planning to build two new sedan models at the site, one based on the Jetta and the other based on the Passat.

Automotive News is now reporting that the second sedan could be a cheaper replacement for the Passat, and would likely be developed primarily for the North American market. The sedan would be larger than the Passat so it could compete with the market-leading Toyota Camry and Honda Accord, but it will only cost about $20,000 – considerably less than the $25,000 Passat.

The two sedans could also be joined by a new midsized SUV designed to sit between the current Tiguan and Touareg models.

VW is still perceived as being overpriced in North America, and last year only managed to sell 230,572 vehicles in the U.S. market. Manufacturing cars in the dollar zone with U.S. components will allow VW to lower its costs and become more competitive with many of its Asian and U.S. rivals.

VW’s management board is expected to make a recommendation for the new site location later today and a final decision should be announced by tomorrow.