Jury members of the European competition say that the Clio wasn't the favourite with all the judges and it was a close call between the little French number and the Passat.
Last year's winner, the Toyota Prius, was a clear favourite and grabbed the title with 37 points more than its closest rival.
Other contenders in this year's competition were the BMW 3 Series, Alfa 159 and Toyota Yaris.
The Passat, 3 Series and Yaris are also to battle it out with the Kia Rio, Citroën C4, Nissan Murano and Audi A3 Sportback for the South African Car of the Year title.
However, the South African winner will only be announced in March 2006.