The Volkswagen Phaeton is Returning to the US. Why?
By Chris Haak
From the day the flagship Volkswagen Phaeton launched in the US, analysts and customers questioned the wisdom of a company known for selling small, sporty, efficient cars deciding to sell a V8- and V12-powered $85,000 luxury car. The wisdom of the Phaeton seemed even more dubious when one considered the fact that the Audi showroom down the street offered a very capable A8 luxury sedan, sharing many of the Phaeton’s parts and powertrain choices, for a price not far from the big VW. There was also the large leap in price from the next-most expensive Volkswagen model at the time, the $40,000 Passat W8, to the Phaeton.
The best the company could have hoped for was selling a few Phaetons to executives who didn’t want the glamour and glitz of a luxury-branded car. The more likely cases were that either the Phaeton would flop, or it would cannibalize Audi A8 sales. As it turned out, the Phaeton flopped in the US. Just 1,433 Phaetons were sold in the initial 2004 model year, followed by 820 units for 2005. The car was withdrawn from the US market in 2006, and several VW executives distanced themselves from the white elephant. Notably, former VW CEO Bernd Pischetsrieder called the car’s global 20,000-unit sales goal a “pipe dream.”
A new regime took over at Volkswagen following Pischetsrieder’s ouster, with Chairman Ferdinand Piëch – the man who championed the Phaeton during his tenure as VW CEO – declaring that his pet project would live on, and would in fact spawn a second generation sometime in the next few years. Too, the next-generation Phaeton will relaunch in the US.
Piëch’s hand-picked CEO, Martin Winterkorn, as well as several “yes men” on his management team, have publicly supported the US relaunch of the Phaeton, heralding the car an important component of restoring VW of America’s profitability and increasing the automaker’s US market share from about two percent to about six percent of the US market.
However, it’s unclear what makes Volkswagen management thinks it will see a different result from the Phaeton the second time. What can they change about the car to make it more appealing to buyers in the US and elsewhere? At the very least, it will still be badged as a Volkswagen (strike one). It will still have expensive powertrains and luxury appointments, keeping the price high and maintaining the cannibalization risk with the Audi A8 (strike two). It will still have a significant price disparity with VW’s next-most costly model, the Touareg SUV (strike three).
As Albert Einstein allegedly said, “the definition of insanity is doing the same thing over and over again and expecting different results.” The Phaeton Mk2, though it surely will be a very good car, seems to be little more than a vanity project spearheaded by Volkswagen’s chairman.
