By on September 22, 2014

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If the definition of insanity is doing the same thing over and over again while expecting different results, then Volkswagen has gone certifiably bonkers.

Volkswagens unrelenting determination to have consumers accept the notion of a premium priced Volkswagen has led them down the path of insanity before: first, the Phaeton, then their planned, cut-price Phaeton for America, which is apparently on track despite Phaeton 1.0’s spectacular failure.

Now, VW is preparing a China-specific premium sedan based on the Audi A6L. Apparently not contend with its exponentially higher volumes, VW wants Audi’s profit margins too. And the best way to accomplish that is, apparently, by making an expensive sedan priced perilously close to Audi, with a badge that, even in China, will be difficult for premium consumers to swallow.

Apparently, a crackdown on luxury car spending by government officials has created a market for upscale vehicles without premium badges, but it seems difficult to understand how this niche will sustain planned volumes of 50,000 units annually, even in the booming Chinese market.

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95 Comments on “The Definition Of Insanity: Selling A Premium Volkswagen And Expecting Different Results...”


  • avatar

    No midsize crossover. But let’s build another Phaeton for the US.

    Also, try engineering a headliner that lasts more than 24 months.

    • 0 avatar
      bball40dtw

      Hey, I had one that made it 34 months.

    • 0 avatar
      LeeK

      I’ve had five VWs over the past 30 years and never once had a headliner fail. I’ve been frequenting VW forms for the past decade and I can’t remember one discussion about failing headliners. I guess I’ve been lucky in not getting an affected vehicle. Since you’re in the business, what models have you seen these failures occurring in?

      • 0 avatar
        bball40dtw

        Mine happened in an MKV Jetta. The other three VWs I’ve owned did not have that problem.

      • 0 avatar

        The one in my ’97 is still as good as ever. The one in my ’14 had better *not* fail.

      • 0 avatar

        A4/5 Jettas, each and every Beetle, B5/6 Passats. These just fail completely. I had an ’08 Audi with some seperation along with an ’05 Cayanne that was down. I just assume when I buy some of these VWs that I need to do a headliner. I’ve noticed they either start seperating in the rear towards the backlight or around the overhead console box first.

        One of my headliner vendors told me it was because of the headliner material iteself and adhesive they use and how its stretch to fit around the various overhead console and odds and ends bolted to the roof of the car. I’ll have to ask him again next time I get one done.

        I also recognize the intensity of the Florida sun cannot help the longevity of headliners.

        I may just very well be quite unlucky with VAG cars and headliners. I say that because the Continental GT Speed we have also has Drooping Headliner Syndrome.

    • 0 avatar
      CoreyDL

      I never had any headliner issues in any of my Audis, all of which were at least 10 years old.

      • 0 avatar
        Volt 230

        it could be weather related, when I lived up north there were never any issues with headliners, exhaust systems, YES, now in so Fla, no rusty mufflers but plenty of droopy headliners and damaged sun visors.

        • 0 avatar
          cbrworm

          Our ’04 A4 headliner was replaced under warranty around ’06. Actually almost every interior piece that you touched was replaced under warranty. All the rubbery coating kept peeling off.

          With all the mechanical issues (our first Tranny was replaced at 12K miles), we didn’t keep the car very long.

          We are also in South Florida. I still have a pile of replacement light bulbs for that car – it went through them so fast I started buying them in bulk. I thought after the alternator was replaced under warranty that the bulbs would last longer (thinking high voltage), but no such luck. We got 60K miles out of that car before we could take it no longer. I don’t think it liked us from the very beginning. Great driving, solid little car though when everything was working.

          • 0 avatar
            JMII

            Me too, in South FL as well. My ’99 (B5) Passat had the issues described: falling headliner, rubber coated on interior pieces coming off (including the glove box which we touched TWICE a year)… and let’s not forget window regulators, all four windows, some twice! Never had the blub issue thankfully. And as mentioned great car when things worked, which was ironically the 3 years during which it had a warranty.

    • 0 avatar
      Jeff Waingrow

      Where does this stuff come from? Six Volkswagons and two Audis, and never a problem with a headliner. For that matter, never a problem with any interior parts. Same goes for rust and paint problems. None. Mechanicals were sometimes a problem, but mostly before 2009. Of late, it’s just miles and miles with nothing but basic servicing. On the other hand, friends’ Subarus and Hondas have had their share of issues. And lots of recalls lately. BTW, I’ve never had a floor mat from VW/Audi that looked like Jack’s Honda’s after 10,000 miles.

      • 0 avatar
        S2k Chris

        And I’ve never had a car that eats lightbulbs like my wife’s MkV, nor have I had to replace the climate control resistor module twice like I did in the v-dub. And now the back driver’s door won’t unlock. Awesome.

        Neither my cars’ floormats look like Jack’s, either, with 104k (S2k) and 60k (TSX), and I wear the same fancy leather sole dress shoes. I do use the OEM winter mats in the TSX 6 months a year.

    • 0 avatar
      superchan7

      B5 Passat that I had for 11 years, no headliner issues. The rest of the car, however, was a reliability and durability disaster. Ate light bulbs and leaked every known liquid…..repeatedly.

  • avatar
    johnhowington

    the answer is clearly spelled out in your own article, its either commit suicide via highrise or buy a non descript feaux luxury volkswagon and continue along greasing the wheels of chinese industry. volkswagon is simply responding to a trend (of suicides).

  • avatar
    SCE to AUX

    In 5 model years, VW sold a total of 3354 Phaetons in the US.

    Hyundai is selling about that many Equus cars every year.

    VW is definitely missing something. Sorry VW; I’ll take Korean engineering any day.

  • avatar
    Pch101

    This is the sort of thing that happens when a company has one leader at the top who can’t or won’t be overruled. There are times when that produces some acts of corporate genius like the iPhone, but it more often leads to mistakes like this.

  • avatar
    Waterview

    I continue to find Volkswagen/Audi/Porsche/Bentley/Lamborghi’s ability to differentiate their brands and products fascinating. Are there really fundamental engineering and parts differences between an A5, Tourag, and Cayenne? How about between the Phaeton, A6, and Bentley Continental (A8?).

    In my (simple) mind, they’ve been able to successfully convince consumers there’s a difference. I don’t see it, but their sales suggest the average consumer does.

    Are they simply showing GM how badge engineering should be done?

    • 0 avatar
      CoreyDL

      The A8 is not on the same platform as the Continental. Yet.

      • 0 avatar
        Waterview

        Yeah, my bad. I believe it is the same as the Bentley Continental Flying Spur (4-door), however. The question remains: why don’t consumers seem to care? A generation ago, people went crazy when they found out their Cadillac shared parts with other divisions. I have to believe a substantial amount of the parts and pieces at VW/Audi/Porsche/Bentley are shared.

        • 0 avatar
          krhodes1

          There is a MAJOR difference between badge engineering and platform sharing. It also helps when the parts in question are actually good enough to use in the most expensive version.

          GM’s problem was they used the same shitty parts built for a Chevy in a Cadillac. That is a big difference between using parts good enough for an Audi in a VW.

          As for the Phaeton – personally it is by far my favorite luxo-barge sedan. Soo luxurious, yet perfectly anonymous. Perfect. If they want to sell a few here, more power to them. I assume they have realistic sales goals for them of at most a couple thousand a year.

        • 0 avatar
          tedward

          waterview

          There’s always been some overlap, but the needle has swung recently towards separate chassis sets in the brand defining products (as detailed exhaustively here by previous management.) Where before VW was more likely to borrow Audi parts and mechanical layouts for large sedans like the Passat, now only the smaller Audis are raiding the VW bin, and VW raids Audi in turn for halo trim drivetrains on those smaller cars (Golf R = S3.)

          The Cadillac/GM issue is present however, in cars like the A3 and Q3. Where GM got in trouble (and where Acura and Lincoln sit squarely today) is using downmarket chassis layouts and components as the core of their product offerings instead of on a few niche fillers. One company that seems to get this is Hyundai/Kia. They preemptively invested in a premium platform before they even figured out how to brand it (they still don’t.)

    • 0 avatar

      Also, you must mean “Q7” where you’ve said “A5”. The 7-seater Q7 is on a long-wheelbase variant of the platform that also underpins the 5-seater Cayenne and Touareg.

    • 0 avatar
      andrewallen

      I have an old Audi 500………..It has half a Galardo’s engine ;D ,also my headliner on that and my 1964/70/72 vw buses have not caved in despite living in Johannesburg, sunny South Africa. Of course my 72 Jag xj6 has given no electrical problems at all thanks to its super reliable LUCAS fittings but my s class Mercedes has however given lots of problems with electricity type things (your mileage may vary)

      • 0 avatar

        I can’t tell if you’re joking or not. If not, pretty cool. But the part about the engine isn’t true. The Audi 5000 (I’ll assume that’s what you meant) was sold until 1994 or so. It has nothing to do with a Lamborghini Gallardo. The 2.5-liter *gasoline* 5-cylinder you’re thinking of debuted more than 10 years later, in 2005, on the PQ35 Volkswagen vehicles. And it *does* use an engine head that is shared with the earlier 5.0-liter V10 engine from the Gallardo (obviously the V10 would have two such heads). But no, an Audi 5000 wouldn’t have that engine head.

        • 0 avatar
          28-Cars-Later

          Here’s an C3 platform Audi 500 for $1,800 in South Africa

          http://www.automart.co.za/cars/for-sale/audi-500-1989-id-1795080

        • 0 avatar
          andrewallen

          I stand corrected sir, they sold the Audi in South Africa with a 2.3 litre gas 5 cylinder as the Audi 500e and while I knew about the heads always had assumed they just upsized the block to re use some of the production machinery. As to the Jag vs S class you must remember not only were they both made in South Africa but Honda Civics (called Ballade here) were manufactured by the Mercedes Benz factory and just like all Toyota Corollas came with Lucas electrics some of the time!

          • 0 avatar
            28-Cars-Later

            I had the exact model here as the Audi 100, still have the extra cans of Pentosin 7S? and 11S. I knew the S-class was assembled in South Africa although I was unaware Hondas were being built by Daimler and Jaguars were being made locally as well.

          • 0 avatar
            andrewallen

            And the power brakes worked by the hydraulics from the power steering pump?(Hence pentosin) like an aircraft? Motor not running? Then neither is the power assist for steering AND brakes!

          • 0 avatar

            And I also stand corrected. I did not realize that there was an Audi 500, haha.

          • 0 avatar
            28-Cars-Later

            Correct, like an aircraft. The last time I had it I couldn’t get it started and unfortunately the shops I dealt with at the time did not want it darkening their doorway, although I did not know the hydraulic system was tied to the motor in the way your describe (my “old classic” is a 240 now). Neat and dangerous at the same time.

            @Kyree

            It sounded familiar from my Audi days so I googled it. The more you know!

          • 0 avatar
            krhodes1

            Hydraulic-boosted brakes work just as well as vacuum-boosted brakes when the engine is not running. Which is not at all. So in both cases, there is a reservoir to preserve brake boost. In the case of vacuum, it is a vacuum reservoir – (usually built right into the vacuum booster these days), in the case of hydraulic, it is the “bomb bomb” – that round pressure vessel near the master cylinder. When that fails, THEN you will have no brake boost with the engine off. But when all is working, if anything the hydraulic systems give longer working time with the engine off in my experience. There are a number of vehicles (my Range Rover, classic Saab 900s with ABS, Buick Reattas) that have a variation of this system in that the brake boost uses an electric pump to pressurize the system rather than a dual-stage steering pump or separate pump. Those pressurize the brake fluid directly – no special Pentosin needed. BMW used a variation that used plain old ATF as the working fluid for the booster. No idea what VAGs obsession with Pentosin fluids was.

  • avatar
    CoreyDL

    I think this car would be most successful in China if labeled as the Santana Elite L.

  • avatar
    schmitt trigger

    Perhaps the fact that your corporate name literally means “people’s car” turns off the 1 percenters.

    They may require to change it to wohlhabendwagen. (WW)

    Sorry if the above word is not spelled correctly…took it directly from Google.

  • avatar
    schmitt trigger

    Perhaps the fact that your corporate name literally means “people’s car” turns off the 1 percenters.

    They may require to change it to wohlhabendwagen. (WW)

    Sorry if the above word is not spelled correctly…I copied it directly from Google.

  • avatar
    Wheatridger

    The Definition of Inanity: repeating the same tired, inane cliche over and over, expecting a fresh reaction every time.

    Not to defend the Phaeton. Neither the Mk I or the upcoming Mk II made much sense to me. But the size and wealth of the Chinese market just might prove us all wrong. I certainly don’t expect that China’s new rich will be worrying about saggy headliners in their old New Beetle. That never happened to mine, despite owning not one but three early-model Mk IVs into six-figure mileages. Nor did any window ever drop into the door, never to return, but I heard that story from an NPR radio host just this morning. That would leave an impression on a dark and stormy night, I’d expect.

    • 0 avatar
      LeeK

      My time in Beijing and Shenzhen have led me to believe that Volkswagen as a brand is very, very highly thought of. Stuck in the murderous traffic in the back of a taxi, I would look around me and count the German-branding cars and at times it felt like I was in Stuttgart rather than China. A newly engineered Phaeton would be well received, I think.

      One day, on the highway up to see the Great Wall, I saw a procession of six Panameras and two Bentleys. I asked my driver what was going on and she told me it was most likely a wedding party. The German success of vehicles and marketing has been nothing short of brilliant in China.

      • 0 avatar
        S2k Chris

        “The German success of vehicles and marketing has been nothing short of brilliant in China.”

        Has it? When you hate the Japanese and you don’t really like the South Koreans, and the Americans half-ass it, it doesn’t leave a lot of other options.

        • 0 avatar
          silverkris

          Probably a better explanation was that VW was among the first to set up shop in China, and worked to set up everything up from scratch. This includes training personnel, setting up parts and service centers – very, very important in China.

          They probably picked the right JV partners (Shanghai Automotive and FAW) that worked for them too.

          And yes, VW has a pretty good reputation in China – but they didn’t arrive by that overnight.

        • 0 avatar
          superchan7

          Or, the Americans are ideological enemies. More accurately, “neither friend nor foe.”

  • avatar
    TW5

    The stealth-wealth strategy is a business model born from the narcissistic inclinations of people within the VW boardroom. The strategy was destined for failure in the United States and the rest of the West, but it appears VW’s narcissistic inclinations may finally have found true-love in Communist China.

  • avatar
    heavy handle

    The Phaeton sold just fine, just not in the US or Canada. There’s a sizable demand for a full-on luxury car that doesn’t scream “douchebag.”

    In the US, Oldsmobile and Buick have traditionally filled that role. I guess now Hyundai will be the go-to for business people who don’t want to send the wrong message in the company lot. I know a few business owners who don’t drive their nice cars to work, simply because it would upset their employees and maybe show their customers that they are overcharging.

    Nobody minds if you drive a large Passat.

    • 0 avatar
      Manic

      You’d drive stealth Bentley. I guess that (and price difference) seem to be some of the reasons Baruth owned 2 (photo above).

      • 0 avatar

        “You’d drive stealth Bentley.”

        That’s closer to the truth. I know the parent company is Volkswagen, but it’s a lot more true that Phaeton is a pared-down Bentley than that the Continental and Flying Spur are Volkswagens in drag.

      • 0 avatar
        28-Cars-Later

        Here’s my question, can one fix the stealth Bentley (or any Bentley). By fix I do not mean repair, I mean to de-VAG it as much as possible.

        In the past it was possible to fix cars which were worth saving with aftermarket drivetrains, electronics, brakes etc. Jaguar of course comes to mind, but also older style RR/Bentleys, RWD Cadillacs, Chrysler Lean Burn 318s, etc. I wonder if it will ever be possible to do the same on some of these newer Bentley models.

        • 0 avatar
          DeadWeight

          28- I came within *inches* of buying a 2006 Phaeton with a bit more than 20,000 miles on it in 2009 from the biggest VW store in Cook County, Illinois, for a negotiated (nearly sealed) 28.5k.

          It was a pristine one owner car bought from that very dealer with all service records. It was an 8 cylinder.

          They LITERALLY couldn’t give these cars away at the time (beginning of the Great Repression).

          The reason I didn’t?

          I spoke to a mechanic friend who is into German things and he dared me to call around and see how many VW dealers had a staff mechanic specifically certified to perform warranty work or service on the Phaeton.

          End result? There wasn’t one such VW dealer within 100 miles of my house (I quit looking after that)

          • 0 avatar

            Yeah. Most people end up taking them to Audi dealerships, who absolutely hate the cars. Having a vehicle that is essentially unserviceable anywhere in your area is a major issue. Apparently, though, my local dealership of choice (Cable Volkswagen) is able to service Kevin Durant’s Phaeton.

          • 0 avatar
            28-Cars-Later

            Such a shame DW, but you were probably better off.

        • 0 avatar

          Er…probably not. And that’s a wider problem, too. When cars were simpler, it was no problem at all for someone to come up with a homebrew mechanical fix for an under-engineered factory part, or even a circuit board. But todays cars with their hundreds of onboard computers aren’t going to be preservable, not with current technology. The Phaeton would be particularly difficult to retrofit because it makes extensive use of fiber optics. Unless you had a very extensive set of schematics from VW themselves *and* millions to burn, you’d pretty much have to gut the car and put in a whole new mechanical and electronic architecture.

          But sooner or later, someone’s going to figure out how to do an LS swap on one…

    • 0 avatar
      Toad

      It’s kind of hard to tell a staffer you can’t afford to give them a $.25/hr raise when you roll in very expensive wheels.

      I had a boss chew me out over a somewhat expensive lunch meeting where I closed a pretty big deal right after he got his new company Olds Trofeo (about $40k in 1990 dollars). I could literally see the new car outside his office window while we argued over less than $200.

      That car ended up costing him (and the company) a LOT of money…

      • 0 avatar
        S2k Chris

        People who spend a lot of money on a car seem to think other people pay attention to how much the people who spent a lot spend. It’s part of the narcissim. In reality, the average person has no idea what cars cost, and barely notice cars that aren’t absurdly attention grabbing (Lambo, etc).

        This reverse snobbery (I’m going to spend a lot but be conspicuously unflashy) is almost always the provence of people who don’t have a lot to spend on a car, or are complete narcissists. Or both.

        • 0 avatar
          el scotto

          Or it could simply be good taste. Submariner vs Tank watches. Talk amongst yourselves

          • 0 avatar
            koshchei

            A bare wrist is in good taste.

            A bulbously ostentatious diving watch is a desperate “look at the 904L-encased commodity ETA movement that I’m flaunting like a metal abscess in a vain attempt to nail my secretary”.

      • 0 avatar
        RHD

        $.25/hour would mean doubling the worker’s pay in China.
        The “rich” are still a small minority there.
        (Meanwhile, look in to who is actually assembling your cheapo Xmas lights.)

        • 0 avatar
          DeadWeight

          Average pay for Chinese auto workers working in designated zones employed by large manufacturers (VW, GM, etc.) is close to USD $800 per month.

          Chinese wages have clocked in at average of 10 fold increase from where they were a decade ago. That’s huge relative to any other country in the world, emerging or developed, including both Brazil & Mexico, each of hi h have also enjoyed healthy real wage gains (but nothing like China).

  • avatar
    Volt 230

    If there was one car company that wished they could turn back the clock, it’s be VW.

  • avatar
    smartascii

    Price-conscious buyers don’t seem to want large sedans. This may be because the Camcord class has grown so large as to make anything larger pretty unnecessary, and it may be because once you get past a certain size, a crossover/SUV/minivan gives you a lot more capacity for the footprint. Buyers who DO want large sedans seem to want an S-Class. VAG can’t sell A8s in any real numbers, despite the fact that it’s arguably better in some respects than the S-Class, and BMW has abused the 7 Series’ styling and quality past the point of recognition. Lexus still sells the LS460. Did you know that?

    In fact, the second-best-selling large luxury vehicle is the A7, though it’s still less than half the volume of the S-Class. If VW can design a striking car that looks and feels more expensive than it is, they might have a shot at stealing some of the few Equus customers, but upselling the people who dropped by the VW dealer for an automatic Jetta with a sunroof is going to be a tough road.

  • avatar
    30-mile fetch

    It’s baffling, to be sure.

    But if this next Phaeton fails, I don’t think it will be entirely due to the VW badge being “difficult for premium consumers to swallow”. The K900 has the same giant K I A on the steering wheel that has been emblazoned on the grilles of some pretty pathetic looking econoboxes in recent memory. Genesis and Equus the same. H/K has been on the upswing, so if they think a case can be made for a mainstream brand selling big luxo sedans, then there may be something to it.

    The almost certain sales failure will be due to something specific about VW brand perception. They can’t even get their North America-only midsizer into the top five sales positions here, even if it was an significant improvement over the last Passat.

    • 0 avatar
      S2k Chris

      No, I think it’s because Kia wants to sell an $80k luxury sedan for $60k with a crap badge, and VW wants to sell an $80k luxury sedan for $80k with a crap badge.

      • 0 avatar
        30-mile fetch

        The limited info I’ve seen suggests $60K is a closer target for a new Phaeton. Some Edmunds article stated VW was interested in capturing potential buyers of $50K loaded 300Cs and Tauruses.

      • 0 avatar
        bd2

        This.

        But based on the reports, seems like VW learned their lesson and that the new Phaeton (not the Chinese market A6L based model) will be priced more alongside the K900 instead of the A8.

  • avatar
    Manic

    Wow, a lot of VAG hate from armchair quarterbacks re. Chinese market. Seems that only commenter who have visited the place (LeeK) thinks big VW could sell as brand has cachet there. Maybe they really need bigger VW branded vehicle and that’d be the ticket. Can’t really say it’s “expecting different results” as they haven’t done this before in China AFAIK.

    • 0 avatar
      superchan7

      Buick and VW, two big brands in China (discreet luxury) that are having trouble in the US.

    • 0 avatar
      Brumus

      This could work.

      The Chinese aren’t particularly fond of the Japanese (to understate the matter) and don’t really dig the South Koreans much either.

      Hence the Buick love.

    • 0 avatar
      DeadWeight

      @Manic-

      I’ve been to China nearly a dozen times in the last 12 years.

      Leek is correct. VW is thought of as a high quality vehicle by nearly all Chinese.

      VW also really was the first western firm to establish large scale manufacturing operations through its JV partners in China, and that they did this at a time when the alternatives to their vehicles were HORRID only helped solidify their image as a high quality product (since it is relative).

  • avatar

    Those 2 cars pictured sure look a lot like pre face-lift B5 Passats, and the B5 Passats looked underwhelming for what they cost. I like plain, tasteful cars, but I think those designs pushed my limits. I can’t afford them anyways, and I can’t speak to any other aspect on the quality on the cars.

  • avatar
    ry6puwh7vybo8ghot8nowo9ly4ne4deth5ca7ghe6bo7he7gyc

    I was looking at a nice, low mileage (77k) 8cyl Phaeton recently.

  • avatar
    Toad

    I actually feel bad for the VW dealers over the Phaeton. They know that Americans buying cars at this price point that want a VAG product will buy Audis, which are usually about 200 feet from the VW dealer.

    VW dealers are going to have to train salespeople, F&I staff, service writers, parts guys, and service techs to sell, support, and service a car that nobody is going to buy. The cost of training, support materials, and the required parts inventory gets real expensive before the first car is sold.

    Normally I don’t feel really sorry for car dealers, but this has to hurt.

  • avatar
    Robbie

    Where have you gone, Jackie Bah Bah Ruth

    A website turns its lonely eyes to you

  • avatar
    Cabriolet

    Did any of you read the original article. Guess not! This Phaeton will only be sold in China. Not the USA. I understand all of you can not stand to read about VW but please give it a break. I have had a number of VW’s since 1980 and have enjoyed each and everyone. Thinking back if the Toyota and Honda i brought in those years was any better i might have stuck with one of them. If VW’s were as bad as everyone claims they are they would be out of business in Europe and China. Cars are sold today only for the lowest price. Most buyers when buying a car today are only interested in the lowest monthly payment. Give them a loan for 96 months and they will kiss your feet.

  • avatar
    Signal11

    What a ridiculous article from someone who clearly has no idea how brands are perceived in different markets. “… with a badge that, even in China, will be difficult for premium consumers …” You have no idea what you’re talking about.

    VW is perceived as a premium, European brand in China. In a lot of middle class circles, it’s even perceived more stylish and fashionable than the BMW, Audi and Merc, the latter two in particular associated with the Party and the military – VW is the brand of the young entrepreneur.

    What do you call a company that’s doing in a different market with different perceptions at a different time with a different approach? Of right, insanity. Because clearly, China is America.

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