Has the VW Phaeton’s time come?

A number of years ago VW introduced the Phaeton to the United States…a $65,000 tour2006_VW_Phaeton_ext_1 de force meant to take the brand up against the likes of Mercedes-Benz.  A true D-class car with all the luxury and performance the segment demands.  It was truly an excellent automobile and from a product point of view pretty darn competitive.  It was also a heck of a lot of car for the money.

The Phaeton failed miserably, with only a few thousand sold.

Many of us thought that VW had simply overstepped, and that the VW brand could not stretch that far up market.  Not unreasonable considering that many of the baby boomers still remember the original beetle and VW’s positioning as an inexpensive, small alternative to the behemoths Detroit was producing in the 50’s and 60’s.  In fact the “inexpensive” portion of the brand’s original positioning haunted VW for years as the cars became more expensive than consumers expected Volkswagens to be.  The Phaeton stretched everyones’ perception of what a Volkswagen could or should be. Most importantly the brand lacked the cachet, the prestige necessary to compete successfully in the Import High Group.  Luxury segment consumers were not interested in sporting the VW badge.

Within the last few months the trades have been reporting that Volkswagen AG and Volkswagen of America are more than likely going to bring the Phaeton back to the US market in MY2010.  Already industry pundits are incredulous that VW would try the Phaeton again.

I think the pundits are wrong.  I think the return of Phaeton will be a success.

The recession has altered Americans’ perception of luxury.  The Wall Street Journal reporter Matthew Dolan was interviewed and commented that Americans have moved from “conspicuous to careful consumption.”  He went on to say that “the luxury of the past is not the luxury of the future.”  Americans are behaving differently after the market tumbled and the recession changed our sensibilities. Everyone has a friend who traded in his BMW or Mercedes-Benz and bought a Jetta diesel or a Prius instead.  This new sensibility, the desire to be “responsible” not ostentatious creates an obvious opportunity for VW’s Phaeton.  Last time around Phaeton didn’t have the “prestige” to compete in the luxury segment…what was a weakness is now a strength.

Add to this new sensibility the fact that we are on the cusp of a new generation of luxury segment participants.   Young men and women who grew up with “Drivers Wanted,” people for whom VW has never been known as inexpensive.  Matt Dolan spoke about this group when he said that the “under 35 crowd’s definition of luxury experience is changing.”  I think it is likely that this generation of luxury segment participants will look beyond the luxury brands of their parents and give different brands a chance.   This group will look at Phaeton and see it as the flagship of a brand that they know well and think is very cool.

There’s going to be  a changing of the guard in the luxury segment as more “careful” boomers buy their last couple of cars  and a new generation enters their high earning years.

I think the new Volkswagen Phaeton with its diesel motor could become emblematic of “new luxury.”

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8 Responses to “Has the VW Phaeton’s time come?”

  1. The articles were to the quality I would expect. They are clearly written and address the topics and keywords I desired. The articles came in days after the deadline though.

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  3. Pretty says:

    that, the S8, like the RS4, has been exceptionally well receevid in North America and the rest of the world. If memory serves me correctly, Audi NA sold out its allocation for 2007 several months ago, so I don’t think there is much concern on the vehicle not selling here.The failure of the Phaeton in North America was quite distinct from Audi’s (success) with the A8 platform here. Audi has and continues to improve its standing in North America and has been able to sell the A8 and new S8 with little trouble. Volkswagen was attempting to launch itself into a product range approximately $30,000 and a whole caliber of client higher than they had ever done before. They lacked the advertising, the dealership support and service and the brand cachet to succeed in this. It was not the fault of the product, but the brand itself that failed to live up to the product, which in essence is a Bentley Continental for about $75,000 less.Audi, on the other hand, has a premium moniker and reputation that continues to improve year upon year. They already have the service and support structure in place to cater to that clientele. This is one reason why the A8 has succeeded where the Phaeton failed. Audi’s premium reputation is far greater in the rest of the world than it is in North America, this is true. However, hop into the way back machine with me about 30 years and you’d find BMW in a similar position. As you should well know, building a brand takes a long time and Audi is doing that very well at the moment.Back to the S8 specifically: I would suggest you try driving one before taking a shot from the peanut gallery. If you need more proof, please check the March 2007 issue of Automobile Magazine, which ranked the S8 well above the comprable Mercedes AMG and Masarati.The S8 is not designed as a volume product, it is a specialty model for the elite for those drivers who know about and respect the engineering and development work of the product. For those drivers who recognize a great product when it is crafted. And it will sell, in limited numbers as it was planned, to those people, just as the RS4, S6 and R8.Were the S8 to be a volume product I would agree with you on your critique that it would not succeed, but it is a niche product. Having said that, your criticism of the brand is a hackneyed response based upon old perceptions of Audi. Ten years ago I would have agreed wholeheartedly, but I would recommend taking a look around today. You’ll find the landscape significantly changed.

  4. Jake says:

    Interesting perspective, Cameron.

    I think there’s a growing realization among those entering their high-earner years that the brands they aspired to as kids are increasingly out of reach.

    I remember my dad buying Audis and BMWs as a kid. We make decent money (maybe more than our parents ever did) and we don’t believe we can responsibly buy a BMW or Audi that fits our needs. $50k for a 3 series wagon or Audi Allroad?? Sure I could lease one, but that’s not the same. To spend that much on a depreciating asset in this economy (or any) seems wrong.

    There’s a dissonance in what we think we should drive (BMW…) vs. what we think we can afford (VW) and VW has the opportunity to capitalize on this at the high end the same way they are doing at the low.

  5. Aaron says:

    I think there is a big difference between those of us who grew up with VWs being “not inexpensive” and spending $80K on what is admittedly probably a great car. But for those of us who grew up with VWs (my family had gobs of them, and I had two Jettas), when we’re looking upmarket, we’re looking at other German brands. Not VW. If we are “upwardly mobile,” we are not looking to be upwardly mobile through VW. We’re looking at Audi, Mercedes, Saab, BMW. And you know what? If I had real Phaeton money to blow, perhaps even Maserati. VW has recently said Americans can’t afford its cars. They’re dumbing down the new “mid-sized” sedan and cheapening out the Jetta. Those of us who grew up on quality VW interiors soon won’t even recognize the cars that we once loved, as they’re scraping bottom looking for more sales at cheaper prices. If CHEAP is the direction that VW is going in an attempt to undercut Corollas and Accords — if THAT is their main direction as it seems to be, it’s going to take a tremendous marketing force to sell the Phaeton to us as a VW. I just don’t see it happening. But then, I’m no expert.

    And one more point — I owned VWs. I left because of how I was treated in their dealerships (two of them). This is mainly why I no longer own VWs. If I’m not able to tolerate their customer service as a $25K Jetta owner, what makes VW think I’m going to tolerate their customer service as an $80K VW owner?

  6. Cameron says:

    You’re right Frank, timing is critical. By the time the new Phaeton is introduced, the Hyundai Equus will be in market for 2 years and watch out for Cadillac. They all see the same opportunity, VW could be late to the party.

  7. Frank X. Stier says:

    Cam,

    Great insights. Perhaps the “new austerity” will bode will for this car. I have to wonder how VW’s sibling, Audi, and its dealers feel about another vehicle in a crowded segment. It’s hard enough fighting for share with German and Japanese contenders. And don’t look now, but here come the Chinese and Indian manufacturers.

    Time will tell. FX

  8. Quick scan of the net - volkswagen phaeton « Movements and Hippies of the Eighties says:

    […] http://autoperspectives.com/blog/2009/10/30/has-the-vw-phaetons-time-come/This new sensibility, the desire to be “responsible” not ostentatious creates an obvious opportunity for VW’s Phaeton. Last time around Phaeton didn’t have the “prestige” to compete in the luxury segment…what was a weakness is now a … […]

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