Volkswagen, A Glutton for Punishment, To Attempt Phaeton Again
Are they “Attempting Phaeton” or “Tempting Fate?”
By Chris Haak
02.19.2008
The Volkswagen Phaeton luxury car hit the US market in November 2003 as the Volkswagen brand’s flagship and with the hope on the part of the company’s management that it could forever change the brand’s “people’s car” image in the minds of consumers and vault the brand to Tier 1 luxury car status. The car’s sales goal was 5,000 units per year.
We all know what happened next: the car hit the market and consumers stayed away in droves. It had many problems, but the top three were probably: 1) the car was too similar in price and size to an Audi A8, yet not sold at much of a discount; 2) the car’s $70,000 starting price was nearly double the price of the next-lower Volkswagen model, leaving too much daylight between the two models, and 3) the Volkswagen brand does not carry the level of prestige that a $70,000 to $100,000+ vehicle requires in order to be successful. Annual sales for the Phaeton during its time on the US market were:
2003: 343 (November and December only)
2004: 1,939
2005: 820 (down 58%)
2006: 235 (down 75%)
2007: 17 (down 92%)
The worst part of the Phaeton experience for VW was not its US sales thud, but how the development of the technically advanced car – including one of the most impressive assembly plants in automotive history – distracted resources from the development of the company’s bread and butter products – the Passat and Golf/Jetta – which forced the company to keep them on the market longer than they would have liked to and cost the company many sales as consumers stayed away from the models in need of a refresh.
Stefan Jacoby, CEO of Volkswagen of America, is toeing the company line (the one re-established by Ferdinand Piech) by stating that the Phaeton should not have been dropped from the US lineup (it’s still sold in Europe) because it’s so difficult to launch a new car in the US and the German management had sky-high expectations for the car.
However, Mr. Jacoby offered some more hints about the Phaeton returning to the US, but it’s expected to debut in Europe in 2010 and would land in the US sometime after that. To differentiate itself from its corporate cousin, the Audi A8, the next Phaeton will be far cheaper (around $55,000 to start) and shorter. Diesel power, not available in the previous US-spec models, is likely to be offered.
Building the Phaeton in the first place was the mistake, not pulling it out of the US market. I mean, is 17 units (or even 235 units) sustainable? If a car that reaches 40% of its sales objective in its BEST sales year isn’t one to withdraw from the market, I don’t know what is. With that being said, positioning the Phaeton (which will remain the name of the new car, in spite of its prior lack of sales success) as more of an E-class/5-series competitor rather than as a peer of the S-class/7-series at the same price should ensure better sales results. Volkswagen manages a large portfolio of brands worldwide (VW, Audi, Lamborghini, Skoda, Seat, Bentley, etc.), but it seems funny that they have so much trouble defining their own brand in the US. At the very least, I’m betting that the 2010 or 2011 Phaeton will sell more than 17 units.
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