Just yesterday Automotive News had an article that reported that amidst a cost cutting drive, Volkswagen has decided to re-introduce the uber expensive Phaeton model:
“…the “people’s car” maker plans to spend millions of euros upgrading a money-losing luxury sedan.”–Automotive News 1/28/15
The blogosphere has erupted with any number of industry observers pointing out the illogic of re-introducing an Mercedes-Benz S-Class competitor when you have announced that you’re cutting costs and, oh by the way, the Phaeton has been a huge money losing proposition ever since it was introduced at the 2002 Geneva auto show:
I acknowledge the inconsistency of an austerity plan side by side with a re-jiggered luxo-barge but I admit to being a bit fascinated with the idea of the Phaeton. The last time we went through the “we’re bringing the Phaeton back” phase was in 2009, right after the end of the great recession. At the time I wrote a post (“Has the VW Phaeton’s time come?“) and offered up the possibility that the Phaeton could be the luxury car for a new post recession sensibility.
I still think that possibility still exists, but the surging millennial generation adds a different twist to the idea. After all, so many millennials grew up driving Volkswagens and we know for a fact that VW holds a special emotional place in American culture. In five years millennials as a generation will be driving luxury segment sales. I think about a new generation of luxury car buyers, who are emotionally attached to the VW brand, who want to naturally separate themselves a bit from their parents and their parents’ luxury car choices (Mercedes-Benz, BMW, Lexus) and I say to myself that’s an opportunity!
Boomers were never going to drop $65 large on a VW, they remember the original beetle, and VW as an economy brand. The millennials don’t have that institutional memory, for them VW is Jettas, Golfs, and Passats that were actually premium priced relative to their competitive set. Is it really such a stretch to think that this new generation of luxury car buyers might consider and buy a large luxury entry from VW? Read the rest of this entry »