Editorial: Stop Trying To Make Phaeton Happen

Derek Kreindler
by Derek Kreindler

In the hagiography of automobiles beloved by enthusiasts, the Volkswagen Phaeton is revered as an icon of technological brilliance, rejected in America by a marketplace of Philistines too self-conscious to appreciate its technological brilliance or unmatched discretion. For once, it’s an estimation not entirely divorced from reality.

But given the disastrous results that resulted in a brief, two-year stint for the Phaeton, one would expect that VW of America, which is desperately trying to rebuild their fortunes in the American marketplace, would be gun shy about reviving the Phaeton in America.

Instead, the Volkswagen Group’s terminal insecurity about the Volkswagen brand’s standing in the marketplace has led it to launch a two-pronged attack, with two luxury sedans planned for both China and the United States.

Legend has it that the Phaeton came about because VW boss Ferdinand Piech was incensed that Mercedes-Benz dared to tread on VW’s territory by launching the front-drive A and B-Class cars as competitors to VW’s small hatchbacks. So he decided to retaliate by going after the Mercedes-Benz S-Class and create the best car in the world.

The approach was flawed, for a number of reasons. First of all, VW had already acquired both Audi and Bentley, which were far better candidates for the job (and ended up sharing the A8 and Flying Spur platform with the Phaeton). Second, as any mainstream brand knows, it’s much, much harder to move upmarket than it is to reach downmarket. Mercedes, BMW and even Audi are able to move downmarket with ease. In the case of Audi, it’s a particularly astute move, since the rebadged Golfs they sell as lower-end Audis can reap fat margins using shared technology, whereas mainstream C-Segment cars have traditionally been a tough place to make any profit.

The flaws in Piech’s logic should have been obvious to anyone with even the briefest hint of cognitive abilities, but his shadow looms large over the Volkswagen group. His management team and board of directors failed to do their duty in acting as a check on his grandiose vision of Volkswagen besting one of the oldest luxury marques in the business. As a result, Volkswagen dealers were saddled with a product that was wholly unsuited for their showrooms, provided a dealership experience that was by all accounts horrific and somehow, Volkswagen wants to do it all over again.

As someone who covers the industry, I am often reluctant to make grand proclamations about strategic direction or product offerings. The OEMs tend to make decisions based on sound reasoning, empirical evidence and careful research and planning. VW’s recent choices, on the other hand, look like some alternate universe where product-focused enthusiasts are running the show with a myopic understanding of what the marketplace wants.

Crossovers are the hottest market right now, but VW’s only offerings are overpriced and not designed with American tastes in mind. Their lineup of sedans enjoyed a brief sales bump upon introduction (spurred on by aggressive pricing and incentives) but has failed to make any major headway. Sales have been on a continuous decline, while former bit players like Subaru have been rapidly eclipsing the VW brand. Meanwhile, reports assert that the next-generation Phaeton has already been completed, even though VW’s crucial mid-size crossover has only just found a production site.

To be fair, the Phaeton has enjoyed modest success in other global markets. But in America, where Volkswagen still hasn’t figured out who and what it wants to be, the Phaeton’s revival can hardly be seen as anything but gross mismanagement. Volkswagen still lacks crucial product like a range of crossovers that are appropriate for the American market, or a range of sedans that actually appeal to the American consumer. Sales have been continuously declining, and Audi is keeping the ship afloat. VW’s Chattanooga factory has also faced a series of skirmishes with the UAW, and VW has been unable to keep out foreign meddlers from interfering in their operations.

Ferdinand Piech, and to a lesser extent, Michael Horn, appear to be fiddling while the VW brand’s American operations burn to the ground. Or perhaps they’re determined to see Piech’s vanity project succeed, no matter what the cost.

Derek Kreindler
Derek Kreindler

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  • Oldgeek Oldgeek on Sep 24, 2014

    It is all about "sales" and "profit". If VW can put a new luxury car in their store and if it provides their dealers and the company a profit they should do so. Many people who shop VW do not shop at Audi so it gives VW another outlet for a high end high profit car. All VW has to do is market it with a large warranty and or an attractive lease / finance package and it has a chance.

  • Cbrworm Cbrworm on Sep 29, 2014

    Whether VW is any good or not is irrelevant. The Phaeton was a cool car and maybe a cool car again. I looked at the original Phaeton and ended up buying an A8 instead. Had it not been for the Phaeton, I may have bought another LS400. So even though it didn't get VW a sale, it got VAG a sale. My A8 was quite reliable. My next Audi purchase was a nightmare right out of the showroom and turned me off to VAG products forever. The luck my brother had with two TDI beetles (first one was lemon lawed), then an A4 swayed him from VW's and Audi's forever. By comparison, his replacement BMW 335i, then 535i and now 740i have been trouble free in comparison. They still have more issues than I would like, but the driving experience does negate some of those issues. My point in all this is that even if it doesn't sell Phaetons, it may generate interest in other VAG products and build revenue.

  • MaintenanceCosts "But your author does wonder what the maintenance routine is going to be like on an Italian-German supercar that plays host to a high-revving engine, battery pack, and several electric motors."Probably not much different from the maintenance routine of any other Italian-German supercar with a high-revving engine.
  • 28-Cars-Later "The unions" need to not be the UAW and maybe there's a shot. Maybe.
  • 2manyvettes I had a Cougar of similar vintage that I bought from my late mother in law. It did not suffer the issues mentioned in this article, but being a Minnesota car it did have some weird issues, like a rusted brake line.(!) I do not remember the mileage of the vehicle, but it left my driveway when the transmission started making unwelcome noises. I traded it for a much newer Ford Fusion that served my daughter well until she finished college.
  • TheEndlessEnigma Couple of questions: 1) who will be the service partner for these when Rivian goes Tits Up? 2) What happens with software/operating system support when Rivia goes Tits Up? 3) What happens to the lease when Rivian goes Tits up?
  • Richard I loved these cars, I was blessed to own three. My first a red beauty 86. My second was an 87, 2+2, with digital everything. My third an 87, it had been ridden pretty hard when I got it but it served me well for several years. The first two I loved so much. Unfortunately they had fuel injection issue causing them to basically burst into flames. My son was with me at 10 years old when first one went up. I'm holding no grudges. Nissan gave me 1600$ for first one after jumping thru hoops for 3 years. I didn't bother trying with the second. Just wondering if anyone else had similar experience. I still love those cars.