Why The Volkswagen Phaeton Failed In The United States


The term Volkswagen means “people’s car” in
German, and that is mostly what the brand sells stylish, well engineered
cars that are still relatively affordable. Volkswagen usually leaves the task of
selling pricey sports cars, luxury rides and super cars to its sister
brands such as Porsche, Audi and Bugatti. But there was at least one time Volkswagen
tried to elbow its way into the luxury car market and it failed
miserably, especially in the United States. The Volkswagen Phaeton was, by most accounts,
a marvelous car, but it was expensive. In 2004, pricing in the U.S. started at sixty four thousand six
hundred dollars for the version with the eight cylinder engine. A 12 cylinder version started at
around eighty three thousand five hundred fifteen dollars. It was widely reported to be a pet
project of Ferdinand Piëch, a scion of Volkswagen’s founding Porsche Piëch family
and a longtime Volkswagen Group executive who has been regarded as
very much a larger than life personality in the automotive world. Piëch had held key roles at Porsche
and Audi and over the years demonstrated a taste for high
quality and high priced cars. He was largely behind Volkswagen’s acquisition
of French super car maker Bugatti, British luxury brand Bentley and
the Italian super car maker Lamborghini. With the fate on, Piëch wanted to
design a vehicle that would be nothing less than the best car in the world,
and he wanted it to bear the Volkswagen badge. The Phaeton was meant to lift Volkswagen
to the level of luxury German car makers such as Mercedes Benz and BMW. The problem was, simply, that U.S. customers did not want to spend sixty
five thousand dollars or more on a Volkswagen. The name itself of the people’s car
implies that it’s supposed to be something for the masses and yet here he
was trying to create a car under that brand to compete
directly with Mercedes Benz. And it just it was a car that just
never really fit the brand as good as it was. And it did a little better in Europe
for a time than it ever did here and never, ever sold to any
in any huge numbers here. To be fair, the Phaeton was
said to be very well built. It had all sorts of luxury features,
many of which were quite advanced for the time and some of
which are still rare. For example, the car had a dehumidifier
in the cabin to prevent the windows from fogging. Piëch, who had a background in
engineering, had reportedly handed down a mostly secret list
of 10 specifications. Many of his own engineers said
would be impossible to meet. One publicized spec insisted that the car
be capable of driving 186 miles per hour all day in one hundred
twenty two degree weather and still maintain an internal temperature of
seventy one point six degrees Fahrenheit. Reviewers acknowledged the craftsmanship and
quality of materials in the car. The interior is solidly built
using the finest leather and wood. Volkswagen could find. Even the production of
the car sounded premium. It was built in Volkswagen’s transparent
factory, a glass walled plant with hardwood floors that also functions
as a kind of museum. Volkswagen uses to showcase
its latest innovations. The Phaeton shared the production line
with the Bentley Continental, a car with which the Phaeton
also shared a chassis. But Volkswagen sold only three thousand
three hundred fifty four fattens in the United States, and the company
pulled the car from the U.S. and just a few years. Although sales were stronger in Europe
and China, it remains one of Volkswagen’s most
controversial vehicles. After all, the brand was meant to
bring style and engineering to the masses. The car was also up
against entrenched competitors from BMW, Mercedes and even Volkswagen’s
own Audi brand. Not that it stood much of a chance. The fate hands best year in the U.S. was in 2004 when it sold one
thousand nine hundred thirty nine units. That same year, Audi sold five thousand
nine hundred forty three of its full size eight sedans. BMW sold sixteen thousand one hundred
fifty five seven series sedans. Mercedes sold twenty thousand four hundred
sixty S-classes and Lexus sold thirty two thousand three hundred seventy
three full size LS cars. That same year. Of course, it is understandable that
manufacturers want to go upmarket and there are cars today that well-made as
they maybe sometimes seem to sit a bit awkwardly with their stable mates to
many of those who follow the industry. But anyone who wants to buy a
2004 12 cylinder luxury Volkswagen sedan can now have a on for
less than twelve thousand dollars.

26 Comments

  • @CNBC why the hell you pronounce Volkswagen WolfsWagon and not "Folks-Va-Gen" ? Ignorant or arrogant ?

  • A dehumidifier in the cabin… Would that be A/C?

  • Less than $12k? In the UK you can get decent ones for under $5k.

  • Just another point to be made: car companies DO NOT UNDERSTAND AMERICAN AUTO MARKETS! Though retired from transportation design now, I could give ANY MANUFACTURER the keys to selling 4-6 million units a year in the U.S., and utterly DESTROY most other manufacturers simultaneously in several sub-categories of 'vehicle production'…the problem is, in year-2 of their efforts, every 'powers-that-be' in the world would use their vast wealth, power and influence to stop it through a combination of regulations, smear campaigns and propaganda…see, it's not about 'volkswagen' (the REAL PEOPLE'S CAR) anymore, or 'green', or even 'what the people want'…it is about elite profiteering combined with the few mega-corporations that run the world's limited product venues. I can prove all this to you with one simple question, too. When's the last time you have seen a COMPACT mini-pickup for sale in America with a STANDARD Cab and 6-ft bed? Don't blame it on the market, either…you have to look at EPA fleet-mileage rules and the 'wheelbase formula' for the REAL answer…see, it's about market control…not efficiency, affordability or customer desires…thus, it's a truly 'FIXED game' worthy of a RICO statue investigation…and the media just won't cover the facts!

  • Moral of the story? People are badge whores.

  • The whole point of the Phaeton was that it formed the basis for the Bentley sedan,which shared many components like the floor-pan and power units and so it was planned to be a a cost effective top end VW variant ! This was not realised. It did fail very badly in the US with peak sales of only 1940 sold in 2004 (Probably dealer demos?) .. Peak sales in Europe were only 4500 units in 2005. It was not even sold in VWs major overseas market China!

  • I knew that Lexus is successful in the USA, but I never knew it was THAT sucessful. Here in Germany Lexus has the same problem as VW (the Phaeton wasn't sucessful here either): In this class people buy because of the brand, no matter how good the car is. So only Mercedes, BMW and Audi has a chance (actually it was als Ferdinand Piech who brought Audi on a level of Mercedes and BMW in the 90s and it was a hard way). And actually also one class under this it is hard here in Germany: There used to be competitors to E-class, 5 series and A6, but they are more or less gone.

  • Chevrolet basically tried something similar with the SS model. It was basically a luxury car sold under a working class' brand. The car had many great features. It also started out at $50k. Basically, people were not willing to drop $50k on a Chevrolet car. GM priced a Chevrolet, an inexpensive brand, at about the same as a base trim Cadillac, the luxury brand. Chevrolet, however, tried to market the car by using it as their Monster Energy NASCAR Cup Series car, but to no avail. The car just did not sell well, and it shows as I rarely ever see a Chevrolet SS on the roads ever! Basically a combination of poor marketing, pricing the car like a luxury car, and selling it under a brand known for inexpensive and affordable to the masses is why it never sold well!

  • I want one

  • If they badge engineered it as an Audi it would have done better

  • Its funny how when cnbc DOESENT cover phony political news slandering the president, they actually do a good job.

  • The Phaeton was just a thrifty, restyled version of the Bentley Continental. VW needed to develop a mid size Bentley anyway, the Phaeton was a by product and hence didn't need to be "successful" by itself. However, it did extremely good in China and helped position the VW brand in China as a luxury brand. The U.S. market is not the benchmark for the taste of the world.

  • Umm it’s a W12 not a V12 but ok

  • Another endless money pit. I hear you Scotty!!!

  • They should've known. Remember Opel Admiral and Diplomat, Fiat 130; great cars but wrong label. In VW's case they were competing against their own (VAG brand) Audi A8.

  • And now they spend more than tht in a Hyundai Genesis and a kia

  • I'm in the UK, and having had a Passat and a Golf, a Phaeton is my next purchase. You can get some really nice examples for £7,500, if you go for the V6 3-litre diesel which gives around 35mpg. Higher mileage ones can be £3,500.

  • Same reason the new beetle failed.

  • I have a b5 Passat that I love dearly, she is a project car. I would love to get one of these. Super clean car, reminds me of a higher luxury Passat. I’m surprised it didn’t do better, probably because people definitely do pay for the brand I suppose 🤷🏽‍♀️

  • Bugatti is italian not french and the Pheaton was a flop it failed in North America and in Europe

  • It failed here in Germany, too. And yet VW is still trying with the Arteon. I guess completely ruling every single car category in Germany just isn't enough, they have to go the "luxury" route… I'll just stick with my Golf, thank you.

  • The phaeton looked ugly compared to its competitors. Thats one of the reasons it failed

  • Because people doesn’t want a stripped down cheaper Audi A8. VW should focused to further improve the quality and reliability of the A8 instead of creating the Phaeton as a pseudo wannabe competitor of the Mercedes-Benz

  • It think it failed largely due it's boring looks, it looks almost identical to the Passat.

  • Best second hand car buy ever! For 10 grants you've got one. Bad news :taxes and fuel consumption

  • Not only does it say VW… but it’s hard to tell apart from a City Jetta from a distance.

    If you want to blend in but have performance and luxury this is the car to have… but most people want to flaunt it. That’s why so many credit posers buy tiny 3 Series and C Classes when they should have bought a Camry or an Accord.

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