By on September 23, 2014

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.

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127 Comments on “Editorial: Stop Trying To Make Phaeton Happen...”


  • avatar
    juicy sushi

    Not that anyone at VAG would have the minerals for it, but it would be really interesting to see them defend their logic on the record, if someone actually confronted them like this in public.

    • 0 avatar
      qest

      I think the real problem is that the Germans have college-educated engineers as auto repair technicians. The cars and repair instructions are designed for that level of worker; whereas, in the US, auto repair technicians are often drop outs who aren’t interested in following detailed instructions perfectly.

      I also think that’s a big part of why they’re unreliable, and without reliability, sales drop.

      • 0 avatar
        Luke42

        I *am* a college-educated engineer, and a disgruntled former VW Jetta TDI owner.

        I did a lot of my own maintenance on the car, and it was clear that the car was not designed with reliability, or servicability, in mind. Both my Ranger and my now-wife’s Prius are engineered to a far higher standard in this respect

        In addition, when problems like the 50k-mile lifetime of the ZF 01M 4-speed gearbox became evident, VW did not offer a re-engineered replacement part at any price. Owners were just expected to spend $3k-$5k on a new gearbox every 5 oil changes.

        No amount of pretending German technicians are better than everyone else can make up for that a lack of engineering support from the mother ship. Also, if VW’s declared rival Toyota can make a car that’s reliable and servicabre in Amorica’s not-German conditions, why can’t VW?

        I really wanted to be a VW fanboy, but the Toyotas I’ve owned since my Jetta have just bee n better engineered, better built, and have had astoundingly better post-sale support. Until that changes, I’ll keep owning Toyotas and posting grumpy comments on the Internet about what VW could do to regain my business. I really did enjoy my Jetta, on those occasions when it was roadworthy.

        • 0 avatar

          I guess VW will keep going because for enough people the driving of the Jetta is, like you recognized, better and they don’t have as many problems as you did. I think, outside the issues you mention, on seviceability and all that, most VWs don’t really have enough problems to anger all owners. On average, it’s probably true that they do have more problems than a Toyota, but I’m starting to think that may not be the reason they are considered mess reliable. I think it’s likely Japanese cars are more consistent, while American and European cars have a higher incidence of lemons.

          • 0 avatar
            Pch101

            Anecdotally, I would say that German engineering is needlessly complicated for the sake of it, which only reduces reliability but doesn’t necessarily provide other benefits.

            The Germans do really well with the intangibles. Road feel and the sense of perceived quality are generally superior (at least to some of us), and they do a better job of creating designs that age gracefully. But the actual nuts-and-bolts engineering just isn’t that great; elaborate should not be confused with good.

  • avatar
    petezeiss

    Is all this scorn for VW and the Phaeton a sublimated result of the realization that the American market is increasingly a side show to China?

    • 0 avatar
      juicy sushi

      Not really sure if that’s accurate. The Chinese market is bigger. Is it more profitable? Does building a car for the Chinese market and then trying to sell it elsewhere on the side a viable business option? If both are true, does that apply to a supposed “premium” product?

      The whole concept of the car just sounds monumentally stupid and a complete waste of resources by VAG. Especially when there are glaring market niches they’re failing to reach which clearly have more potential, given the success everyone else has had in them.

      • 0 avatar
        GiddyHitch

        The Phaeton is definitely a play for the Chinese luxury market, where VAG has already achieved a healthy footprint that they can leverage going forward. That being said, the Chinese are CUV hungry just like the Americans and better product in this segment would be more meaningful to VAG’s bottom line. But Germans and all that.

      • 0 avatar
        oldgeek

        While the potential market in China is large, it is less so than many would have you believe. When you realize that the average wage for a worker in China in an Apple related plant makes $15 a day ( good paying job) you understand that the actual disposable income for the masses is quite small.

        Back on point, the auto industry in China has major infrastructure issues. First the cities are jam packed with people and the introduction of cars in those cities will be slower than traffic in times square. Second, outside the cities the roads are far from prepared for major traffic expansion. While the growth of the car market in China will continue it is unclear what will sell and how many can be.

        • 0 avatar
          Vega

          The Chinese car market is already bigger than the European or the US car market.

          Given the large absolute numbers, even a small affluent percentage results in a larger end market. BMW and Mercedes sell more 7 series and S-class vehicles in China than in the US. Usually without rebates.

    • 0 avatar
      jetcal1

      Pete,
      No. The scorn is a result of VW selling vehicles that were not only unreliable, they were matched with the equivalent dealer experience. And the customer got to pay a premium for the experience as well. I understand VW has improved. That’s great..but many of us will never consider the vehicle or the company again.

    • 0 avatar
      CJinSD

      Maybe the scorn is for product planners who build cars for the incredibly unsophisticated and tax-regulated Chinese market only to then try to dump the same tacky garbage on us. The US market is big enough to merit specialized products from Honda and Toyota. Anyone that settles for a Chinese tax code car with geegaws is a buffoon.

      • 0 avatar
        jetcal1

        CJ,
        We never get the latest VW.The scorn has been there multiple platforms and product cycles.

      • 0 avatar
        Vega

        Nice arrogance. Unsophisticated? BMW, Audi and Mercedes sell most of their large luxury cars in China.

        And speaking of tacky garbage, the specialized US products from Honda and Toyota are usually decontented but bigger vs. global offerings. Cheap, but large and shiny, just what Americans want. As an example, the cheap US Accord is not available in the rest of the world. The European (and JDM) Accord is sold in the US as a ‘luxury’ Acura TSX.

        • 0 avatar
          dtremit

          “As an example, the cheap US Accord is not available in the rest of the world.”

          Not that simple. Both cars (USDM Accord and USDM TSX) were sold in pretty much every market except Europe. E.g., in Japan the Accord nameplate went on the TSX, and the USDM car was sold as the Inspire. In Australia, the US car was the Accord, and the TSX was the Accord Euro.

          For the 9th generation, the US car is the Accord everywhere it’s sold, which doesn’t include Europe. The old TSX is still on sale in Europe and Australia, but is probably on its way out.

    • 0 avatar
      psarhjinian

      “the American market is increasingly a side show to China?”

      The American market SAAR is around sixteen million. That’s not a sideshow, no matter how much VW spins their failure as such.

      China (or another BRIC market) might be where growth is, but ignoring the US or Europe is rather short-sighted. You want a presence in every market you can, so as to insulate yourself from a downturn in any other market. If China slides, VW has only Europe and (to a lesser degree) the other BRIC nations, whereas GM has all of the above, and Toyota is only weak in Europe. VW could find itself in a revenue crunch very quickly.

      • 0 avatar
        krhodes1

        It’s a sideshow for VW. They manage to be a top 4 global automaker while selling a quantity of cars in the US that rounds to zero. Ultimately, they are in the identical position in the US as Toyota is in Europe (and China). Toyota NEEDS to succeed grandly in the US, VW does not. VW sells 3X as many cars in China as Toyota does. VW actually sells more cars in China (3M)than Toyota sells in the US (2.75M) – that last actually surprised me.

        Really, if VW could manage to get their act together in the US, they actually would easily be the largest carmaker in the world. And it won’t take much, VW only sold 400K fewer cars than Toyota in 2012. The top 4 are really, really close in sales.

        • 0 avatar
          petezeiss

          Thanks for all the replies, I’m glad I asked the question.

          It was just an intuitive niggle from all the heavy opprobrium heaped upon VW every day here contrasted with the dim knowledge that Chinese seem to like them pretty well.

          Personally I will remain a tower of ignorance about anything German in the modern automotive world because that’s worked out fine for me so far.

          Unless the Caddy ever makes it here.

  • avatar
    ellomdian

    One of the Rare times I have to agree with Derek wholeheartedly. Anyone with the financials to make a Phaeton happen in the US is already probably going to be shopping an A8, or a Fully-loaded A6 at the worst. VW does not have the brand perception to fight that segment in the US. Not only that, but at least the last one was a legitimate S-Class competitor – hell, they made a nice Bentley out of it. This one is going to be put together from Lego-bits that underpin everything down to the A4, and that is likely going to present some severe limitations and compromises.

    Let’s be honest – the only reason this is happening is because the Chinese have decided to crack down on the logo on the front of your car, regardless of the price or content. I have to wonder why they are forcing what will likely be a stillborn, expensive model into the US again; I can only assume it somehow makes getting into the Chinese market easier.

    • 0 avatar
      Toad

      “the only reason this is happening is because the Chinese have decided to crack down on the logo on the front of your car”

      That is an important point, and basing a model introduction on a bureaucratic whim is not a sound business plan. What will VW do if the Chinese government declares that the brand is not the problem, but the price? Tomorrow morning their government could decide that no party or government functionary can have a car costing more than 1X the average citizens annual wage, or that any car costing more than X amount has a huge surtax. Presto, no market for the Phaeton.

  • avatar
    koshchei

    When I look at the Phaeton’s overlap with the A8, all that I can think of is the Chevrolet Caprice Classic’s overlap of the Cadillac DeVille.* I may be off the mark, but it seems like the VAG may be repeating the mistakes of Malaise-era GM.

    *- Yes, I know the difference between platform-sharing and brand-engineering. My analogy still holds.

  • avatar
    James2

    We all love to play armchair CEO but… isn’t this VW’s mistake to make? Why should we care about their idiotic product planning? If he doesn’t think VW needs a bunch of CUVs, who are we to object? Piech may be a madman, but if it wasn’t for his insistence there would not be a 1000-hp-plus Bugatti Veyron. Not saying the man is right, but until there’s a coup d’etat VW will be run his way.

    • 0 avatar
      sportyaccordy

      This is an editorial, not an edict. You’re confusing an opinion with a command.

    • 0 avatar
      George B

      The problem is that 1) money for brand support and “shelf space” is limited and 2) the low-volume Phaeton sucks money away from supporting the Jettas, Passats, currently unavailable crossover, and GTIs that Americans actually buy. American customers will lose something in terms of other Volkswagen vehicles or an even worse dealer experience as resources are shifted to support the Phaeton. Volkswagen needs an affordable CUV and a longer warranty. Instead we get an expensive Volkswagen.

      I feel exactly the same loss when UAW overhead forces the domestic manufacturers to use obviously cheaper materials or when a grossly bad engine choice like the 2.5L in the ATS or 2.7L in the Charger takes resources away from building better cars.

  • avatar
    heavy handle

    I don’t see how the US-crossover and the Phaeton are related at all.

    The first Phaeton did well enough worldwide to warrant a second one. Given VW’s modular engineering, it meets US laws and regulations, so they figure they’ll ship a few here. Big deal.

    People have a hard time accepting that VW is the most profitable auto company around, even though they could care less about the US market.
    Is the deeper issue the fact that our feelings are hurt? That they don’t need us anymore? That we’re not all that important?

    • 0 avatar
      hreardon

      Heavy –

      The real issue is that Volkswagen has its head up its own arse when it comes to priorities in the US market. Instead of throwing millions at marketing, dealer support and sales for a car that will sell…well, about as well as the old one did, they should be focusing on the segments they could be competitive in, but have nothing to offer.

      What this tells me is that VW has nothing new to offer the US market in the segments it most needs to compete in, in the near future, and they’re looking to recycle the Phaeton in a vain attempt to pick up a few points of margin in the US. I’ve said elsewhere that it will be 2016-2017 before Volkswagen becomes competitive again in the US, which puts them pretty squarely into their 10 year boom-bust North America cycle.

      This news about Phaeton is nothing other than attempt to fill a vacuum.

      • 0 avatar
        Manic

        And thus you prove Heavy’s point. VW does how it likes, maybe prefers to sell cars where they can make more money? US with poor margins not interesting enough? I guess they know they need CUVs but this is dev. cycle question and now it’s Phaetons moment. They have sold approx. 80000 Phaetons, development costs are shared with A8 and with oh so profitable Bentleys and all that doesn’t look too bad in VW HQ.

        PS. Derek is trolling on yesterdays post where he got China market view probably completely wrong. If you go vw.com.cn you can see that vw has actually 3 Passats there (US Passat, Euro Passat= Magotan + wagon, CC), but nothing bigger until Phaeton, so there’s clearly room for A6 based/sized car in the lineup.

    • 0 avatar
      dtremit

      They’re related in the sense that VW has finite development resources, and they’ve prioritized a niche vehicle over a global mainstream model.

      I suspect they would make more profit in three months with a modern crossover than they will in the entire lifecycle of the new Phaeton. And not just in the US.

  • avatar
    cdnsfan27

    I know this will come as a great shock to the B&B but the US is NOT an important market for VAG, nor is it anywhere near the most profitable. When the manufacturers crack down on dealers who sell to exporters you know the profits are elsewhere. Just look at the selling price of the MB GL350 or the Q7 TDI in China, Russia and the Middle East compared to here. Americans want luxury automobiles but refuse to pay what the are worth. We think we are rich, we act rich but we are in the end poseurs.

    • 0 avatar
      TMA1

      “We think we are rich, we act rich but we are in the end poseurs.”

      On a global scale, the U.S. is “old money.” Those other countries you mentioned are “new money” – they don’t know what it’s worth, and will happily blow it on status symbols. Paying 2-3 times as much as the car is worth will certainly attract positive attention from manufacturers.

    • 0 avatar
      baggins

      funny stuff.

      I dont think MBZ is subsidizing sales of GL350s for us. If so, why are they doing that. There are no price controls, why would they sell cars here at a loss to us ruffians who wont pay what they are “worth”

      Russia and MIddle east are just natural resource extraction economies.

      China is growing, but per capita the US is about 8X richer. http://data.worldbank.org/indicator/NY.GNP.PCAP.CD. On a total basis the US economy is 2x the size of China.

  • avatar

    If anything, this Phaeton comes at a worse point than the last one.

    In the early 2000s, VW had not yet developed a reputation for really terrible reliability but had a very sound image as a ‘premium’ offering, spurred on by the release of the then-new Jetta, Passat, and Golf which were all vastly improved and significantly higher-end than their competitors (Remember auto up/down windows? Rubber-coated door pulls? Real leather? Premium Moonsoon sound systems? Disc brakes and smooth rides?).

    In the last 4 years, VW has reversed this image, and so now the brand has an uphill battle on reliability and a significantly devolved premium status. This is in stark contrast to the huge step up that Audi has taken.

    Basically, this car makes even less sense now than it did a decade ago.

    • 0 avatar
      heavy handle

      Strange thing about that VW reliability reputation. It’s only in the US as well.
      VW Canada doesn’t have the same reputation, even though they sell the exact same models (and outselling Subaru 2-1 I might add).

      In Europe they are considered one of the most reliable brands. In China they have a reputation of being the only cars that are tough enough to run taxi duty.

      Sure, you’ll find a few reliability horror stories in each of those markets. Just like you would for any popular brand. Overall, however, VW is considered to be at the top of the reliability ladder.

      • 0 avatar
        psarhjinian

        “Strange thing about that VW reliability reputation. It’s only in the US as well. VW Canada doesn’t have the same reputation”

        Oh, yes they do.

        “In Europe they are considered one of the most reliable brands.”

        Yes and no. They’re considered about on par with Ford or Opel/Vauxhall, and better than Fiat and the French. They are not considered—objectively—as reliable as Toyota, but they do enjoy home-court advantage and European buying and usage patterns don’t impact VW as much.

        “In China they have a reputation of being the only cars that are tough enough to run taxi duty.”

        Taxis just have to have cheaply available parts. That there’s a bazillion parts for old Jettas/Boras means about as much as the bazillion parts available for Crown Vics in North America. It doesn’t make the Crown Vic reliable, except in that special sense of the word used by fleet managers.

        • 0 avatar
          heavy handle

          VW has a much better rep in Canada than in the US, and it’s borne-out by sales.

          The Golf is the gold standard in the European C segment, no doubt about it. Toyota is merely a footnote.

          You’re just arguing perception for China, and that’s exactly what I was saying as well. Who knows what the real reliability numbers are.

          • 0 avatar
            juicy sushi

            VW has never had a good rep here in Canada in my experience.

          • 0 avatar
            krhodes1

            VW has an excellent reputation in New England for that matter.

            Their “bad reputation” is primarily on automotive forum dwellers.

          • 0 avatar
            geeber

            VW’s bad reputation doesn’t just exist on internet forums.

            I’m sure that European drivers view VWs as reliable. It’s a combination of the factors that Toad mentions, plus the availability of Fiats, Renaults, Peugeots and Citroens. Compared to those cars, a VW is reliable.

            In the U.S., the standard of reference is Honda and Toyota, and compared to those vehicles, VW doesn’t look so good.

            Incidentally, various European reliability surveys also place Honda and Toyota at or near the top for reliability.

            Because of the factors that Toad mentions, European drivers place less of a premium on reliability than American drivers do. If you don’t drive your vehicle as much, and you receive it as a perk from your employer, you’re not going to be as concerned about breakdowns and non-maintenance repairs.

          • 0 avatar
            Pch101

            JD Power Vehicle Dependability Study results for VW-brand cars include a whole lot of 2’s, a few 3’s and nothing higher.

            The VDS scale runs between 2 and 5, with 3 being average and 5 being best. (All of the below-average cars are given 2’s, as there is no “1” on the scale.)

            I don’t have Consumer Reports handy, but I would expect the results to be similar.

            It isn’t just the internet.

          • 0 avatar
            Pch101

            In the UK on the WhatCar? reliability survey, the most reliable brands were Japanese.

            VW came in 21st place out of 38. The reliability average on this survey was 12th place.

            http://www.whatcar.com/car-news/honda-tops-reliability-survey/1202107

            So VW was below average in the UK, too. The list would suggest that reliability is not a strong motivating factor for car purchases in the UK and/or that customers haven’t yet figured out that they could do better.

          • 0 avatar
            krhodes1

            Europeans know that the Japanese makes are more reliable. They just don’t CARE. Just like I know that on average a Lexus will be more reliable than my BMW. I still won’t buy one, because the BMW is reliable *enough*. An extra repair every couple of years is a small tradeoff for a car that I like better.

            Note that reliability is not completely unimportant to me, I would not have bought an early BMW 335i, for example. I also did not order certain options that are more likely to be troublesome over the long haul. What is not there will never break.

            The reality is that even an “average” reliable car today is pretty seriously trouble-free. We are to the point where the infotainment system is the difference between average and above average in these ratings. We are living in the Lake Woebegone Days of automotive history.

          • 0 avatar
            Pch101

            So, a few hours ago, VW’s lower reliability was an internet myth. But now that data has been provided that specifically contradicts that assertion, we now learn that VW’s lower reliability is not only well known outside of the interwebs but that it is widely embraced by Europeans.

            That’s a fairly drastic shift over such a short period of time.

          • 0 avatar
            krhodes1

            To PCH101

            Don’t be melodramatic. To listen to the internet forum idiots, including many on this one, every VW is some sort of insane ticking time bomb, just waiting to shred your wallet and rape your children or some such. Reality is that they are somewhere around average +/-, in an area where there just is not THAT dramatic a difference between worst and first. What was it Mike Karesh used to say – something to the effect that the difference was some fraction of an extra repair trip per year?

            If that is what it takes to drive something interesting vs. something as deathly dull as a Camry or Corolla (or Euro equivalent thereof), I, and evidently a few hundred million Europeans, will gladly take that risk. Obviously, VWs do not have wide appeal in the US for many reasons, and I actually agree with you that they should just pursue whatever niches work best for them. But it gets REALLY old that every single solitary article on TTAC brings out the VW Doomsday Chorus, with the Phaeton causing particularly rousing bouts of screeching.

            Not that much of VWs current US lineup is all THAT interesting, but they do have a couple cars that would interest me if I had a smaller car budget, and the first new car I ever purchased was a Golf TDI (loved it, miss it still). If I could not afford my current BMW there would certainly be a manual TDI wagon in my garage. Not brown though.

          • 0 avatar
            Pch101

            No melodrama here. I’m just pointing out that the data doesn’t match your (fondness for) anecdotes, and that you are quick to change your story when it suits you.

            VWs are less reliable than average. That isn’t an internet myth; we have enough data to know that it’s an accurate statement.

            That may not bother you personally, but it obviously has an impact on VW’s ability to sell cars to Americans. Denying it won’t change the reality, and your anecdotes won’t, either.

          • 0 avatar
            heavy handle

            Here’s the thing about VW reliability outside of the US:

            VWs do have problems but, overall, they are longer-lived than most brands. They’ve got good corrosion protection, good parts availability, and little things like coated chassis bolts that keep them serviceable (literally) even after a dozen years.

            For some reason, VW USA has some of the worse dealership experiences anywhere. I don’t know why, but I’ll guess that it’s a mixture of poor training and very little goodwill warranties.

            That’s only in the US. Everywhere else, VW dealers know what they are doing, and are willing to do what it takes to keep customers happy. This makes VW reliability a non-issue when buying a new car.

          • 0 avatar

            @heavy handle

            Depends really. Here in Brazil, where VW was the leader for most of my life, part of the reason I never had a VW were the dealers. They don’t like to deal, and think their product is golden. I also hear a lot of complaints from those who have VWs that the dealers are painful to work with, American allegations of VW not recognizing problems in their cars ring true to my Brazilian ears.

            There are many factors, but here in Brazil, the relatively low opinion VW dealers is part of the reason they went from first to third place in this market (technical tie with GM in second really).

          • 0 avatar
            heavy handle

            Here’s a real-life example.

            Mid-late 00’s VWs had an issue with spinning water pumps.
            The shop that I frequent (in Canada) does a lot of VW, and they would send anybody with that issue to local dealers where it would get fixed under goodwill. Everybody benefits from that, and nobody rants about how they’ll never buy another VW.

            Compare and contrast with how US VW dealers treat their customers.

        • 0 avatar

          @Psar

          You should look at the table Pch provided. Your perception may change. Fiat placed 12. Citroen 13 and Peugeot 15. VW 21. In that light, what is more reliable?

          But, I’ll note that I place little faith in these surveys. What is the difference between 12 and 1? In 38 brands, if you are down around 3, there is a biggish difference. But the top 10? Minimal. Top 20? Barely noticeable.

          BTW though Chevrolet was 7, those are Daewoos. Vauxhall was 20. So where is GM betther than Fiat or the French?

          This isn’t the 70s, 80s and part of the 90s anymore.

      • 0 avatar
        Toad

        “In Europe they are considered one of the most reliable brands.”

        This horse has been beaten to death, but I’ll give it one more wack. Europeans drive shorter distances on better roads in company cars that are traded in sooner. Americans are harder on their cars, less meticulous about maintenance, and run up more miles on worse roads. Americans are also influenced by Asian brands with excellent reliability (that are not nearly as common in Europe) that raise our reliability expectations.

        Europe is a different market with different expectations, and what Europeans consider reliable does not pass muster in the US. That’s why VW is the ONLY mass market European brand with any market share at all in the US; we barely tolerate VW, and Fiat, Renault, Peugeot, Skoda, etc don’t stand a chance.

        We also tolerate Audi, BMW, and Mercedes on the high end, but the incredibly steep depreciation curve tells you how consumers view their reliability.

        • 0 avatar

          VW being “barely tolerable” in the US has more to do with VW’s size and might than anything else. Fiat is there, so is Renault in a roundabout way. PSA cars could find buyers too, if their cars had a market in the US.

          So, in my opinion, European makes find it difficult to compete in US because of:

          – exchange rate
          – no knowledge or willingness of local mechanics to learn new cars
          – relative size of the companies.

          The rest is internet/mechanics/”enthusiasts” myth making.

          • 0 avatar
            Pch101

            There are two basic issues that make the US unique and difficult for smaller producers:

            -Car prices are relatively low
            -Fixed operating costs are relatively high

            The car business is highly competitive in the US, which contributes to lower prices. (There are other factors, such as the reserve currency and relative absence of a European-style company car tax subsidy that are also relevant here.)

            The law of supply tells us that higher prices lead to more suppliers, while lower prices lead to fewer. Lower prices without sufficient volume to make up for the reduced margins produces losses.

            The US is geographically large, with a widely dispersed population. Accordingly, it takes a lot of infrastructure to serve the market. That infrastructure needs cash to support it.

            These factors favor volume players. Companies that want to go the distance in the US have to jump in with both feet and get enough market share to cover the low margins and high fixed costs. That is naturally going to keep some companies out; they can’t sell enough product at high enough prices to make it worth their while.

          • 0 avatar

            Yep, we’re basically saying the same thing, though you are taking a more “technical” point of view.

            The other aspects can be overcome for sure. I also don’t discount the Japanase have an almost captive market back home, that alllows them to do foreigh forays relatively easily. Toyota has almost 35% of that market for instance. In comparison, the European market is much more fractured.

            Like you said, you have to make an expensive and long term commitment. The mechanics thing is a real issue though. I remember here, when Fiat decided to grow and strive for first place in this market, they were the easiest to approach and get information from. They made all their manual available and kept little hidden. They would even visit larger shops in cities of all sizes and gives seminars all over the countries. Here, the French have yet to learn that lesson for example.

    • 0 avatar
      Varezhka

      This. VAG is big and profitable enough worldwide that an occasional vanity project like Phaeton is fine. It’s just that it doesn’t really make sense to bring them over to United States as things currently stand.

      In the early-mid 2000s when VW’s direction was that of a semi-premium, Audi-lite brand, Phaeton kind of made sense. Over in Europe where they are still going with that direction, it’s fine.

      However, VW has indicated that they are going to go more mainstream/affordable for the US market with the current generation Passat, Jetta, and Golf, and releasing a $70K flagship here will only muddy that message. What kind of brand does VW want to be in the US, really?

  • avatar
    bultaco

    VWs problem in the US has been poor reliability and indifferent dealers since the original Rabbit in 1974. Product got nicer and more Audi-like in the 2000s, but reliability still lagged. Then in the 2010s, they decided to conquer the world and become Toyota by pumping out dull cars designed for the American market. Problem is, Americans would rather buy a reliable dull car from Toyota than an unreliable one from VW.

    The Phaeton had the same problem at a different market stratum. Most buyers, especially in the US, would rather buy a bulletproof Lexus than a $60,000 VW with the same spotty reliability as a Jetta and zero cachet.

    In the US, VW will always be sort of a niche player for people who don’t want to buy American or Korean or Japanese, but can’t or won’t pay for an Audi or BMW. The Phaeton was just an inexplicable money shredder for the company, as the article points out.

    • 0 avatar
      oldgeek

      I agree with your assessment of poor reliability and indifferent dealers. I owned 4 VW’s ( a glutton for punishment and slow learner). The first 2 years of ownership were acceptable and after that they were nightmares. VW replaced the AC on my last (forever) Passat. Turns out that their Mexico facility was a huge problem and they eventually sourced it back to Germany. Then their were engine coils and engines that coked up, resulting in VW requiring the use of synthetic motor oil. The headlights would burn out once a year and the list goes on.

      I don’t care about the warrantee, it is a matter of having a car that is reliable. I know I was not the only one with these issues. My brother and nephew had the same issues and the dealers and VW acted like GM in the 70’s. We moved on and like my wife who will never forgive GM for her issues in the past, VW (and Audi) lost my business which BTW was a new car every 2-3 years.

      Excuses are for losers.

  • avatar
    Land Ark

    While I agree that VW doesn’t need to put out another Phaeton and that it will still not sell well in the US, it is impossible for me to tell them not to produce it.
    If the choice is to produce a low-volume oddball sedan or make a large SUV, I’ll take the oddball every time. The more we discourage taking chances, the more midsize CUVs we get.

    • 0 avatar

      Would you rather a low volume sedan that will fail or a large SUV that might subsidize the next Scirocco. I don’t understand automotive diversity simply for its own sake when it has a net negative impact on an entity.

      • 0 avatar
        koshchei

        Thanks to Lee Iacocca, CEOs get to be psychopathic bastards who get whatever they want (diplomatic translation: “personalities”), regardless of whether or not it hurts the organization they’re supposed to be running.

      • 0 avatar
        krhodes1

        What is the definition of “fail”? I suspect they expect to sell a couple thousand a year here. You can sell a couple thousand of just about anything with wheels. Will it be the best selling car in it’s class? No, but that is not “failure”. Profitability is an exercise in accounting for an corporate entity the size of VAG. You can make it as profitable or unprofitable as will fit within the accepted accounting framework you do business in.

        If I had a use for this class of car, the Phaeton would be my top choice. So very discreet, and that V8 TDI would be reason enough all by itself. Surely I am not alone?

        I cannot even for a moment believe that the decision whether to sell the Phaeton here has any impact what-so-ever on other product decisions. We don’t get the Scirocco because that kind of car is WAY out of fashion here at the moment, and being built in Germany I expect it would be too expensive. And then the Internets would whine about THAT too.

        • 0 avatar
          geeber

          We’ve down this path before.

          The Phaeton sold a whopping 1,433 units in the U.S. in 2004, followed by an even more whopping 820 units in 2005.

          So, yes, you appear to be relatively “alone” in your desire for a Phaeton.

          • 0 avatar
            Kevin Jaeger

            So about the same volume as the Equus and K900, then. Since these cars are already produced for other markets it’s hard to tell if that small volume in the US helps or hurts the global profitability of the model.

      • 0 avatar
        Land Ark

        Certainly a valid point in the Cayenne-pays-for-bonkers-911s sort of way.
        However, VW has made it crystal clear that they aren’t going to be selling the Scirocco here. Certainly lack of other model sales hasn’t kept it out.
        And at the same time, VW doesn’t need a big SUV to pull up their sales in the US in order for them to bring over existing EDM models. They obviously didn’t need it to finance building a US-only crappy Passat.
        Plus, who’s to say the Phaeton will preclude their building an SUV? Couldn’t they coexist? Perhaps the Phaeton was the pet project that they just wanted to get out and the SUV is actually going to take real development time.
        Clearly I don’t know the answers to any of this as VAG-US refuses to respond to my job applications.

      • 0 avatar
        Vega

        If a project like the Scirocco need ‘subsidy’, VW won’t build it. The Scirocco is just another body variant build on an existing platform, the decision to bring a Phaeton to the US or not has no impact on whether VW will bring the Scirocco to the US. VW brand wants a part of the Chinese luxury market, given the group’s platform strategy they can have a stab at it fairly inexpensively. Whether they try to sell a few of these cars in the US or not is just not important.

        Find a different white whale, Ahab.

    • 0 avatar
      Pch101

      Building a sedan with the wrong badge attached isn’t pushing the envelope of automotive design, it’s just a good way to lose money.

      VAG has other marques that are better suited to this purpose. What might be really exciting is if VW could figure out a way to make their cars more reliable for the average customer. (And no, removing content for American customers isn’t the same thing as adding reliability.)

  • avatar
    Pch101

    “To be fair, the Phaeton has enjoyed modest success in other global markets.”

    It has? I haven’t seen all of the numbers, but I am under the impression that it has been a flop generally, with Germany being an exception. The fact that Bentley production was added to the line in order to cope with demand for the Bentley and utilize unused capacity for the VW would suggest that it wasn’t exactly a home run.

    Also, The Economist reported last year that the Phaeton was one of the biggest bleeders in the European car market: http://www.economist.com/blogs/graphicdetail/2013/09/daily-chart-18

    • 0 avatar
      heavy handle

      Big picture: how many more Passats were sold because of the Phaeton? How many newspapers and magazines ran stories about the Phaeton factory? Most of those stories were in publications that don’t even have an automotive section.

      All this on a platform that they were gonna build either way, with virtually no cross-shopping between VW and Bentley?

      Sounds like a home run to me. That Economist story doesn’t consider that VW made a near-6 figure profit on every Bentley coming off the same line.

      • 0 avatar
        Pch101

        “how many more Passats were sold because of the Phaeton?”

        I would bet that I have enough fingers and toes to account for those.

        The Phaeton has all of the aesthetic appeal of a bar of soap. As far as halo cars go, it isn’t. The New Beetle was more of a halo car than this, and the New Beetle actually made money for a time.

        • 0 avatar
          heavy handle

          We were talking about global markets, not US.

          Are you a millipede? You’ll need lots of fingers and toes.

          • 0 avatar
            Pch101

            The car was a flop generally. Doubling down on a flop just makes it a bigger flop.

            Outside of the US, the bread and butter for Volkswagen is the Golf. I see no data or logic that shows a positive correlation between Golf sales and the existence of the Phaeton in the lineup. If there is anything that helps to sell mainstream Golfs, then I would bet that the GTI and R32 do far more to build cachet than the soap bar with the high price tag.

            On the whole, the Phaeton looks like an enormous waste of resources that would have produced a greater payoff had they gone into a crossover or six, and possibly something with glamor that could hit a lower price point.

          • 0 avatar
            krhodes1

            @PCH101

            It is VW’s money to waste. Thankfully Ferdy runs the family business, not you. And ultimately, it IS his family business.

            Don’t like it? Then I suggest you buy enough stock in VW to make yourself Chairman of the Board. Good luck with that.

          • 0 avatar
            Pch101

            If there was supposed to be a rebuttal in that last comment, then I must have missed it.

          • 0 avatar
            krhodes1

            Only that your opinion of the situation counts just as much as mine – not at all.

            It’s VW’s money to do with however they want.

          • 0 avatar
            Pch101

            Thanks for the strawman. I wasn’t commenting about shareholder rights or the authority of VW’s board, but on the lack of wisdom of the decision.

            And this car is a bad decision. There’s already an Audi A8; no need to build an unattractive second version that not many people want.

          • 0 avatar
            MBella

            I would assume that the price to make a VW version of a car that’s being made isn’t going to cost them that much. Once that’s paid for, this thing could be very profitable even in small numbers. There will be way more meat on the bones of one of these than a Golf.

          • 0 avatar
            Pch101

            “Once that’s paid for, this thing could be very profitable even in small numbers.”

            The numbers tell us that it isn’t profitable at all. Quite the contrary, it’s a significant loss generator.

            The fact that it missed its volume targets by a wide margin is a good indication of that. They can’t amortize all of the fixed costs over that low number of units.

    • 0 avatar
      Vega

      http://www.autoevolution.com/news/volkswagen-phaeton-strong-sales-in-china-44024.html

  • avatar
    Timothy

    My two / three cents. VW used to know what it stood for. Back in the late 90’s early 00 they produced a line of cars that people wanted to purchase. They were more expensive than their counterparts across the lot at Toyota or Honda, but for a few grand more you got a German driving experience in a package that in terms of initial quality was light years ahead of anything else in the class (yes, i’m pulling the Interior Materials card).

    I absolutely loved my underpowered 2002 Jetta GLS. Silver with black leather. Every option because why not. That car drove like nothing else in its class. It had a solid Germanic feel that no other car could provide in the price range. For that privilege I paid a premium. I suspect most VW loyalists felt the same at the time.

    Compare that to the current lineup of “Americanized” wanna-be CamCords. What is the point of paying slightly more for a shitty car that doesn’t really inspire notions of autobahn cruising? I’ve driven the current Jetta, it’s an uninspired appliance. It feels flimsy compared to my memory of my 02. It feels disconnected. Don’t even get me started on the current Passat.

    If pay more money for that classic VW experience no longer exists and what is one left with? Over priced cars, shitty dealerships, and poor build quality.

    It’s why this time around I bought a Ford. And there is a statement I never imagined myself uttering in my entire life.

    • 0 avatar
      Ryoku75

      I get the distinct feeling that VW wants you to buy an Audi for that “German feel”, I’ve heard that Audi interiors are far better, even in the VW-based Audi A4.

      • 0 avatar
        krhodes1

        The A4 is not “VW-based”. The A3 IS based on the same platform as the Golf, but that is a universal VAG platform. You could just as easily say the Golf is Audi-based. The America-specific VW interiors are nothing terribly special (but those cars are cheap), the global product interiors are very nice (but those cars are more expensive).

        As for VWs current product in the US. They made a bet that cheaper/bigger is what the US market wanted. So they gave us a cheaper/bigger Passat and Jetta. And sales soared for a few years. But since the great recession, those people still buying new cars are buying more upmarket than previously. So maybe VW would have been better off staying the course. They are certainly putting content back into the cars the past couple of years.

        Hindsight is always 20/20.

        • 0 avatar
          Ryoku75

          I mean the A3, my apologies. I can’t tell the A3 and 4 apart from one another.

          I have no experience with modern VWs apart from looking at them, I admire their subtle styling and I understand the reasoning behind their cost-cutting.

          If we’ve learned anything from American cars in the past 20 years or so its that Americans want big sizing, 8+ cup-holders, phone connectivity, cheap prices, and “tolerable” interior quality.

          • 0 avatar
            Timothy

            Except that isn’t what American’s really want as evidence by the very thoughtful, well equipped, stylish interiors of the new generation of cars manufactured by the Big 3. It’s odd to me that VW would go down market to satisfy a demand that doesn’t really exist. If it did exist, the Big 3 wouldn’t be spending tons of money on new interiors using high quality materials.

            There used to be a segment called “near luxury” and while I’m certain it still exists the lines have been blurred to such an extent that that companies like VW which used to deal almost exclusively in Near Luxury have been left swimming against the tide trying to play catchup to the resurgent American companies.

            As krhodes1 said, hindsight is 20/20.

  • avatar
    sportyaccordy

    While VW’s foray into the luxury F-segment is particularly egregious, I would say any Johnny-come-latelys to the luxury game in the German format are not much less out of whack. Hyundai/Kia are only able to move their offerings at a 50% discount compared to the competition. I get the sense that their offerings are loss leaders like the ’89 LS400, except the German offerings today are the best they’ve ever been, rather than being the sleepy 10 year old offerings the LS400 easily trounced. In other words, unlike Lexus, if Hyundai/Kia is selling at a loss to get a foothold in the market they will never make their money back. Even at a sharp discount the Equus is getting outsold by everything from the S-Class to the XJ.

    Peich is, in a word, a megalomaniac, and if VWAG doesn’t want to become a boutique luxury conglomerate with no mainstream presence their board needs to get him out ASAP. VW has struggled, languished and destroyed its brand image over a period where brands like Hyundai and Ford have managed to restore and bolster theirs.

    • 0 avatar
      krhodes1

      @Sportyaccordy

      What are you on about?? VW is the 2nd or 3rd largest carmaker IN THE WORLD. And one of the most profitable mainstream makers. What they do in this increasingly irrelevant isolationist oddball car market of the USA is likely less and less important to them by the year.

      They have the money to do any sort of vanity project they set their mind to do, from the Veyron, to the Phaeton, to the 200mpg wonder-mobile who’s name escapes me. Ferdy probably pays for them all out of petty cash or his cigar fund.

      • 0 avatar
        geeber

        Things aren’t quite so rosy at VW:

        http://www.forbes.com/sites/neilwinton/2014/08/16/volkswagen-focuses-on-costs-bottom-line-as-europe-weakens-china-threatens/

        The U.S. market is still an important market. VW’s failure to succeed in this market doesn’t make it any less important.

        • 0 avatar
          DeadWeight

          And North America will be an even more important market for VW if, say, China’s blazing hot GDP/GNP growth of the last decade (averaging around 8ish % annually) should wane (slowly is easier to digest; suddenly, due to some crisis, would really crimp a lot of the eggs in VW’s basket).

      • 0 avatar
        sportyaccordy

        Vanity projects like this, as they destroy their brand equity and lose market share or have zero presence in key segments, are the height of stupidity. No amount of fanboy white knighting (as you are doing all over this thread) will change that. You and Piech are 2 peas in a pod…. stubborn as tree stumps and willing to go down with the ship rather than admit it’s sinking

        • 0 avatar
          MBella

          How is a flagship sedan like this destroying brand equity. It could be argued that it will loose money, but I doubt it will hurt the brand. Nobody is going to be ready to buy a Passat, but decide against it because they built a Phaeton.

          • 0 avatar
            Pch101

            “Destroy” overstates the case. But stuff like this really doesn’t help.

            In the US, VW branding is incoherent. It’s fairly clear that the company doesn’t understand that its heritage largely gets in the way of its US ambitions.

            VW built its brand in the US as being quirky and different, which is good for a niche but bad for the mass market.

            If VW wants to become a major player here, then it needs to take a page from Hyundai’s playbook and focus on reliability. Otherwise, it really ought to get real, give up on the America uber alles plan, and just become the best niche player that it can be. They can’t just sell decontented versions of a few cars from their European lineup and reasonably expect to become a heavy hitter here.

          • 0 avatar
            sportyaccordy

            That was a poorly written sentence. VW is destroying its brand equity, not this Phaeton that doesn’t yet exist.

            Point is Piech’s priorities are all screwed up, and this time he doesn’t have the mid aughts bubble to cover his losses.

        • 0 avatar
          krhodes1

          I’m hardly a VW fanboy, I haven’t even owned one for a decade. I have owned 5 in total, and had excellent service from all of them. But I have owned many more Saabs and Volvos, and just as many BMWs. But I think they make decent cars and get a bum rap based on a past that is rapidly receding into the distance. I know an awful lot of happy VW owners personally, I do not know anyone personally who has had a particularly bad experience with one. So I call them as I see them.

          As for the company as a whole, just look at the fact that while 5-6 years ago 2/3 of the American car companies actually went bankrupt, and the third didn’t only by mortgaging everything up to and including their logo, it was pretty much business as usual in Wolfsburg. Just like it was in Toyota City. So obviously, VW has not clue one what they are doing, right? The little vanity project that is the Phaeton is going to destroy their brand equity and bring them down? Seriously?!

          • 0 avatar
            sportyaccordy

            And today, all 3 of those American car companies sales are up YOY, while VWs is down in the US. Today, VW doesn’t have any serious entries in segments of big growth (CUVs). And the bread and butter cars that represented the brand and accounted for the bulk of the volume (Jetta and Passat) are puffed out husks of their former selves.

            But hey, at one time Cadillac was the standard of the world, so why should anyone question anything they are doing now, 50 years later?

            VW is a mess that needs cleaning up and Piech is not the man for that job. Your discomfort and censorship campaign over this topic won’t stop the conversation.

  • avatar
    GiddyHitch

    “Legend has it that the Phaeton came about because VW boss Ferdinand Peich 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 legend that I remember and seems far more likely is that VW execs were envious of the flagship sedans that their counterparts at other German brands rolled up in at industry functions and basically justified a business case with their inferiority complex.

    Also, is there really a contingent of car guys who pine for these things besides JB (who I was surprised to learn recently owned two of them at the same time)? That would be news to me. I remember thinking that the interior was cheap and gimmicky unlike the Passat that came out a few years earlier.

    • 0 avatar
      krhodes1

      I RARELY agree with Jack on much of anything, but I do agree with him on this one. The Phaeton was the pick of the litter when it was offered here. All the tech and luxury of a Bentley at 1/2 price, wrapped in a handsome but completely discrete wrapper. If I had any justification for owning a 4dr luxobarge, I would have one in the garage right now. But I don’t, so I don’t.

      And for the record, the dealership experience at MY preferred local VW dealer is no different than that at my local BMW dealer. Excellent, in either case. I have bought one car new from each. The VW dealer has a far nicer and more upscale showroom though, for whatever that is worth. And they sold a fair number of Phaetons.

      • 0 avatar
        baggins

        krhodes – do you work in sales?

        Over the years, Ive noticed that many salemen, like you, are very anecdotal. “The VW dealer in my town is nice . . .”

        You also tend toward hyperbole. Another characteristic of sales people.

        For record, I dont think the Phaeton will sell much in the US, but hardly think it matters to VW if they are building it anyway for China.

        • 0 avatar
          sportyaccordy

          Actions speak louder than words and krhodes’ PR campaign speaks to some level of investment- tangible or just emotional- in VW’s image.

          VW’s sales are down and their lineup is increasingly at odds with American tastes. Instead of wasting money on this they should make some CUVs.

  • avatar

    How does it follow that moving downmarket is easier than upmarket? For each CLA Merc sells there’s a Genesis that Hyundai sells.

    • 0 avatar
      sportyaccordy

      Here’s the funny thing about that… I am pretty sure a CLA and Genesis cost about the same.

      Once you get beyond 70K or so most logic gets thrown out the window and the intangibles come into play. It doesn’t matter how good the Phaeton is- a big VW on the grill will prevent it from having even a quarter of the success of a real deal S-Class.

  • avatar
    SCE to AUX

    VW and Cadillac should co-market the Phaeton 2.0 and the ELR 2.0 together.

    For perspective, even Kia’s K900 is selling at a faster pace than the Phaeton did, and everything sells faster than the pathetic ELR.

    The problem with the Phaeton isn’t the Phaeton; it’s Volkswagen. They can’t seem to pull off the stretch upward that Hyundai, Chevy (Corvette, Suburban, trucks), Toyota, and even Kia seem to be able to do.

    • 0 avatar
      dal20402

      The K900 is selling at a faster pace than the Phaeton because it’s cheaper.

      Every $5000 you increase the price makes it harder and harder to sell a car without a luxury badge in the US market.

      Some markets will buy $75k cars without a luxury badge. The US is emphatically not one of them.

  • avatar
    CoreyDL

    “with two luxury sedans planned for both China and the United States.”

    So what we’re getting is a totally separate model from the one China will get? That would seem to be an even more expensive proposition.

    • 0 avatar
      Manic

      Yeah VW China gets A6L based and sized car it needs, i.e. it’s still smaller and class below Phaeton. New Phaeton China gets also (from Europe) but that car goes to NA market too.

      • 0 avatar
        CoreyDL

        They should probably just do the A6L version in China and call it a day.

        • 0 avatar
          S2k Chris

          IF they just popped the 4 rings off and put the Favurnugen symbol on an A6, would any Chinese officials even notice? Hey Ferdy, I know how to save you some Euro….

          • 0 avatar
            Manic

            Well, maybe they’ll take current A6L, create some VW themed front and rear designs and that’ll do. If sold only after new A6 comes out, milking the old A6 as much as possible is not that bad idea.
            Btw., they have done exactly that before, with A4 in europe, trying to sell slightly re-designed previous A4 as SEAT Exeo. It flopped, but maybe things are different in China.

  • avatar
    vwgolf420

    I think they really need to bring the Polo to take on the Fiesta, 2, Sonic, Fit, etc.. Bringing the Up! as a price leader city car might not be a bad idea either.

  • avatar
    MinPVD

    I’ve seen a few Phaetons on the streets of Shanghai and Beijing since I’ve been back in China for work…
    They are just not good looking cars. The old models look like someone stretched out a passat on a rack.
    This thing has got to be someone’s pet project. There’s no way that Vag needs this car since they also own audi.

  • avatar
    Glenn Mercer

    Building on PCH101’s reference to the Bernstein analysis presented in the Economist newspaper: through Fall 2013 (when that analysis was done) Phaeton had sold 71,000 units globally, over 12 years, against originally planned volume of 350,000 over 7 years. These are global numbers, covering all countries. Given the gigantic R&D and tooling costs required, and the dramatic shortfall in volumes against which those fixed costs would be amortized, Bernstein estimated a loss per car in the range of 25,000 Euros. Yes, for each car sold. I don’t know if these numbers are right but Bernstein published its numbers and methodology, and to my knowledge VW never refuted them.

    PS Lest we forget, one reason the fixed costs ran so high was because the Phaeton was supposed to be the primary beneficiary of the very expensive W-12 engine. So not only was the car at the ragged edge of the VW model range, so was the engine.

    • 0 avatar
      S2k Chris

      Don’t forget that giant $$$$ plant they built that looked like an Ikea showroom.

    • 0 avatar
      krhodes1

      See here:

      http://www.caranddriver.com/features/vws-transparent-factory-frequently-asked-questions-page-2

      Per that article, at the time of the construction of the Glass Factory, VW anticipated “building up” to a production rate of 4-5K cars a year in Dresden, though in theory the factory COULD produce 50K if they ran 3 shifts. Having seen the place, I doubt very much they could get enough parts to it to produce anything like that many cars a year. So if they planned on building 4K-5K a year, and built 71K in 12 years, they more than hit their target. And still managed to build some Bentleys there too.

      I also do not doubt they lost money on every one of them. The cost of building that factory alone certainly ensured they would.

      The primary use of the W12 is Bentleys – I doubt VW ever planned on selling more than a handful of W12 Phaetons. The volume seller was bound to be the TDI versions, both V6 and V10.

      • 0 avatar
        Glenn Mercer

        Prior to launch, VW itself said the target was 30,000/year globally, for 7 years (210,000). And the Dresden plant was built originally for 30,000+ unit capacity. A year after launch, target was trimmed to 12-15,000 globally, for 7 years. Some of the released capacity was dedicated then to Bentley.

        Everything in the preceding paragraph is from public VW statements.

        Cost was “500 to 1,000 million Euros for R&D and tooling” and “another 200 mm for the Dresden plant.” Also a public VW statement.

        (Others have said the 500-1000 figure is too low because it excludes the development for the W engine. I dunno.)

        I am not imputing any targets to VW, only writing here what they said about the car, mostly at the 2002 Geneva Motor Show.

        And about 70,000 units over more than a decade is less than the original target, but not far from the revised target.

        (I am not weighing in on whether the Phaeton was a failure or not, or whether VW’s own statements were true or not, or judging whether 70,000 units was a failure or not, only throwing into the discussion what data I have on file.)

  • avatar
    elimgarak

    I wish I had the balls to own a W12 Phaeton. Even though I could afford the maintenance, I think it would frustrate me.

    Still, one of my favorite cars of the last 15 years.

  • avatar
    Kevin Jaeger

    I don’t get the sudden Phaeton obsession. In any case it’s ridiculous to talk about making the Phaeton happen – it has already happened and is selling okay in some markets but not others.

    VW is the number one brand in China and already has the number 1 selling luxury car with the Audi A6L – it would seem they understand that market pretty well and I’d be Phaeton will be a success there.

    From VW’s point of view, the US is a small market with difficult and expensive regulations that makes large numbers of their models and drivetrains unprofitable to even try selling in. They don’t currently sell the Up!,Polo, Passat wagon, Scirocco, Touran, Sharan, Caddy, Multivan, California, Amarok or Phaeton in North America at the moment. All these vehicles and several other regional specialties continue with no presence in the US at all.

    Whether it makes sense to add another 2% to global Phaeton production and sell in the US is hard to say. But whether they choose to add that 2% or not has nothing to do with whether or not the Phaeton will happen. That will be decided by sales success in Europe, China and other markets like the BRIC countries.

  • avatar
    wmba

    Ferdy Piech – my favorite industrial oligarch.

    The original Phaeton was the aluminum A8 remade in steel instead, with an extra thousand pounds of road-hugging weight, or wait, because it took longer to accelerate.

    Then Ferdy had that glass factory erected where prospective customers could watch their Phaeton being misassembled. Well, the factory still exists, so of course they had to build a Phaeton Mk II.

    Who cares what America thinks? Ferdy’s on the job and his are the only orders that count.

  • avatar
    goacom

    A couple of points that almost everyone seems to be missing:
    1) It is strategically important that VW halts the momentum of Audi that is aggressively capturing market share in the US.
    2) The Phaeton is a perfect vehicle to demonstrate the superiority of “German Engineering” by bringing back memories of Tiger tanks blowing up their lesser competitors.
    3) For all their differences, the Chinese and Americans have very similar tastes – they like all things big, bling and beautiful.

  • avatar
    MK

    The number of people who give a damn about the VW phaeton are approximately equal to the number who want brown, diesel station wagons.

    And they’re of just as much significance to VW’s bottom line.

    • 0 avatar
      krhodes1

      Actually, VW sells a decent number of diesel station wagons in the US. Every one they can be bothered to import in fact, at a healthy margin. And you can get them in a nice metallic brown, and even with a manual transmission. Globally, they sell ENORMOUS numbers of diesel station wagons. Probably quite a few in brown, it is a very IN color at the moment.

      So I would say that brown diesel station wagons are actually pretty important to the bottom line in Wolfsburg.

  • avatar
    chicagoland

    A $70K full size SUV with VW badge would have buyers fighting to have the first one. [See Chevy Suburban sales] But for cars with trunks, buyers want ‘the best deal’ first, and everything else, next. No way will Phaeton be a hit.

  • avatar
    05lgt

    If this is going to be an ongoing thing here, can we call it “Hatin’ on the Phaeton”?

  • avatar
    oldgeek

    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.

  • avatar
    cbrworm

    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.

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