VOLKSWAGEN has lopped $2500 from the entry price of its Jetta sedan range, with the larger but lighter and more efficient sixth-generation model to be priced from $26,490 plus on-road costs when it reaches Australian showrooms next weekend.

Having dropped the old 77TDI variant for now, the new base model Jetta comes fitted with VW's punchy 1.4-litre 118TSI petrol engine and six-speed manual transmission, meaning the new model is effectively $4500 cheaper than its outgoing equivalent, which was priced at $30,990.

No longer just a three-box Golf variant but a dedicated sedan riding on a longer wheelbase and unique dashboard design, the entry-level Jetta even undercuts the similarly-engined but 175mm shorter Octavia 118TSI liftback from VW's in-house value brand Skoda – by $6500.

A simplified Australian line-up – stripped from seven variants to five – comprises a choice of two petrol engines and one diesel with three trim levels, with all but the manual 118TSI featuring standard six- or seven-speed DSG dual-clutch automatic transmissions. The base model can be upgraded to seven-speed DSG for $2500.

Volkswagen Group Australia (VGA) managing director Anke Koeckler confirmed at the Jetta launch that its sharp pricing was helped by the strong Australian dollar.

She also revealed that although no dedicated BlueMotion eco-variant was on the agenda, variants featuring BlueMotion Technologies (BMT) such as idle-stop will be introduced once the model has become established, probably next year.

That means the 77TDI (on which BlueMotion) is likely to make a comeback, promising hybrid-rivalling fuel economy of 4.2 litres per 100km.

Ms Koeckler said that after the Golf, Tiguan and Polo the Jetta would become Volkswagen's fourth “volume pillar” in Australia although VGA general manager for press and PR Karl Gehling admitted global supply could become a limiting factor if Jetta sales take off.

The Wolfsburg-based brand has shifted almost 15,000 Jettas in Australia since the model was introduced at the beginning of 2006, averaging 220 units a month and peaking at 656 units in December 2007.

This year, VGA has sold 498 Jettas, down 53 per cent.

Now 4744mm long and riding on a 2633mm wheelbase, the Mexican-made Jetta is 190mm longer than its predecessor, bringing it within just 25mm of its Passat big brother and securing it a place in the medium segment.

In middling 118TSI Comfortline guise, the Jetta is priced lineball with the $32,490 sticker price as the mid-spec Ateva variant of Toyota’s Australian-built Camry volume-seller, just one of the models from which Volkswagen hopes to poach market share in a medium segment battle due to hot up when the Japanese giant launches its next Camry in November.

“The (Australian) market is not really growing,” said Ms Koeckler, who said the local economy remained strong but that financial doom and gloom reported in the media was affecting consumer confidence. “We have to take sales away from other brands if we are to grow.”

Hyundai will launch its classy i40 wagon around the same time as the Camry – and the ambitious Korean car-maker may later drop an i40 sedan into the mix – before Holden and Mazda weigh in with all-new mid-sizers well into next year.

Divided into base, Comfortline and Highline trim levels, all Jettas come with cruise control, leather steering wheel with audio and telephone controls, chilled glove compartment, heated electric door mirrors and an eight-speaker audio system with CD player, MP3 and USB connectivity.

Compared with the outgoing model, base-model Jettas lose standard equipment like alloy wheels and parking sensors but Bluetooth – traditionally an expensive dealer-fit option – becomes standard across the range.

Despite shrinking 17 litres compared with the old model, the Jetta's 510-litre boot capacity still beats the full-size Holden Commodore's cargo capacity by 14 litres.

The boot can be extended by folding down the 60/40 split rear bench – which for security purposes can only be folded using levers inside the boot – and features a load-through ski hatch on Comfortline and Highline variants.

Standard safety features across the range comprise six airbags, including front, side and curtain airbags. Crash Impact Sound Sensor (CISS) – which debuted on the current Golf – adjusts deployment of airbags and seatbelt pre-tensioners to maximise effect in a crash.

The remarkable 118TSI engine (118 indicating maximum kilowatts) is available with base (manual and seven-speed DSG automatic) or Comfortline specification (7DSG only).

It displaces a whole litre less than a Camry’s naturally-aspirated 2.4-litre unit but produces an extra kilowatt of peak power. With 240Nm of peak torque, it punches out a not-insignificant 22 extra Newton metres.

As expected of a sophisticated direct-injection engine force-fed by both a supercharger and turbocharger, the Volkswagen beats the Camry’s naturally-aspirated, multi-point injection unit on fuel consumption by almost 30 per cent, returning 6.2 litres per 100km against the Camry’s 8.8L/100km.

While the Camry’s engine pumps out 208g/km the 118TSI's CO2 output is reduced almost six per cent compared with the outgoing model, to 144 grams per kilometre when mated to the DSG transmission

Although the highly-strung Volkswagen unit insists on being fed pricier 95 RON premium unleaded, the 30 per cent fuel saving more than offsets the average seven per cent difference in cost – and it is a similar story with all the Jetta's main competitors.

Comfortline spec, expected to account for the majority of Jetta sales, is also available with the 103TDI diesel ($34,990) and comes with a six-speed DSG automatic transmission and 16-inch alloy wheels with Pirelli tyres (base models get 16-inch steel wheels with Hankook tyres).

It also includes tyre pressure monitoring, dual-zone air-conditioning with automatic air recirculation, automatic headlights and wipers, self-dimming rear-view mirror, electrically-folding door mirrors with puddle lights and front/rear parking sensors.

The 103kW TDI engine exclusive to mid-level Comfortline spec produces 320Nm of torque and consumes 5.5L/100km, with a CO2 output figure of 143g/km – an eight-per cent fuel saving and 13 per cent reduction in greenhouse gas compared with the old Jetta, an achievement which VW claims sets a segment benchmark.

Priced at $37,990 the Highline variant packs 147kW and 280Nm from its turbocharged 2.0-litre petrol engine – a carryover from the previous-generation Jetta and MK5 Golf GTI – and is good for a 7.5-second 0-100km/h sprint and 7.9L/100km.

Ford's 34mm longer Mondeo Ecoboost hatch undercuts the Jetta Highline on price by $250 while providing an extra two kilowatts and 20Nm of torque at a modest fuel cost of 0.1L/100km over the VW.

That said, in price-comparable middling Zetec trim the Ford misses out on niceties such as leather and touch-screen six-disc CD changer, which are standard in the Highline-grade Jetta.

Other Highline highlights include 17-inch alloys wrapped in Bridgestone Potenza rubber, front foglights with static cornering lights, 15mm lower sports suspension, headlight washers and leather sports seats with heating.

Both Comfortline and Highline variants get extra chrome brightwork on the grille and inside the cabin, with the Highline also featuring chrome on its lower air intake and along the bottom of the side windows.

Comfortline variants can be specified with the Highline's alloys, sports suspension and foglights plus rear privacy glass with a $2000 Sports package while the leather upholstery is $3000 extra, with $500 on top for electric driver’s seat adjustment.

For $700 Highline buyers can upgrade to Queensland two-tone alloys and rear privacy glass. Comfortline and Highline cars can have a glass sunroof fitted for $1900 and an alarm for $600.

Satellite navigation is $2500 for the Highline and $3000 for the Comfortline. The only option for base-spec Jettas is metallic/pearlescent paint, at $500 extra.