THE AUTOEXTREMIST

August 25, 2010

The Ultimate Answer to the Question that Absolutely No One is Asking.

By Peter M. De Lorenzo

(Posted 8/24, 4:30PM) Detroit. The news came streaking across the Internet like an anvil launched off a cliff, Volkswagen AG is planning on bringing back the Phaeton to the U.S. market. You remember the $80,000+ Phaeton, don’t you ($70,000 for the V8, $100,000 for the W12)? Yet another one of Ferdinand’s Follies (aka Ferdinand Piech, the uber chairman/megalomaniac of the VW Group), the weirdly-named Phaeton was going to be Piech’s ultimate power grab of the luxury auto market when it arrived in 2003. Designed to humble established German luxury players like Mercedes-Benz and BMW overnight, the Phaeton – at least in concept – would crush its competition with a combination of high-level execution, attention to detail and technical superiority, all wrapped in a package that would be just too seductive to ignore. At least that was The Plan.

But, of course, Piech - his infinite ego brimming with the possibilities of it all - didn’t stop there. He built a magical “Transparent Factory” for the Phaeton in Dresden, Germany – as much homage to his self-absorbed brilliance and vision as it was a modern take on a “clean” factory – and it was from there that the Phaeton would rise up and slay the mighty luxury dragons from his German rivals.

Oh, if it were that easy.

The Phaeton flopped and was gone from this market by 2006. It seems that the American consumer public just wasn’t ready for a VW super-luxury sedan that approached six figures in cost, no matter how much of its architecture and underpinnings were shared with the Bentley Continental. Who knew?

The whole exercise only served to expose the perennial flawed logic emanating from the Emperor’s Suite at VW in Germany when it comes to this market. Piech and his empowered minions can’t for the life of them figure out why American consumers can’t be led by the nose to drink whatever flavor of automotive Kool-Aid VW is selling, no matter how out of sync it is with what the brand represents here.

The reoccurring problem for Piech over the years is that when the only one brilliant enough to be in the same room with him is himself, then rational decision making usually gets lost in the shuffle and the various realities at hand are swept under the rug by subordinates focused on not losing their jobs.

The only man on the planet convinced that VW can carry off a super-luxury moniker with aplomb is Piech, and of course, his appointed sycophants of the week. (I say “of the week” because if you disagree with Piech in private, you’re toast. And if you do it in public you’re fired. So that pretty much leaves a passel of “yes people” at his beck and call pre-programmed to nod their approval, but I digress.) Everyone else in the industry can buy VW being a premium brand to a degree certainly, but a super-luxury player? No.

But that has never stopped Piech and his legions of minions. They’re the only ones who failed to see the flaw in the logic of constantly pushing VW up against Audi in this market and around the world. After spending billions upon billions of dollars trying to elevate the Audi brand and solidifying its reputation around the world, why would you possibly want to throw a grenade in the mix by pushing a super-luxury VW that plays in exactly the same marketing space as top rung Audi models? Why, indeed.

But then again, don’t underestimate the considerable hubris that Piech brings to bear on anything to do with VW or “his” VW Group every day. His Empire is vast and his reach is long, and if he feels like tinkering with a super-luxury VW to his heart’s content just to prove a point that he can – even if it is to the detriment of Audi – then he will tinker away, rational, more balanced perspectives need not apply and flat-out common sense be damned. It’s Piech’s world and we’re all lucky to be guests in it after all.

So here we are. VW is planning to sell 800,000 vehicles – or more – in this market by 2018, in effect tripling its current sales numbers in a little over seven years. Yes, that may happen, but then again that would mean a massive American consumer “buy in” to the VW brand on an unprecedented scale. That’s a lot of Jettas and it’s a lot of the “Camry killer” sedans that they’re planning on building in Tennessee too. And I just don’t see it happening.

Market strategizing in a vacuum has never served anybody in this business well, but VW is truly gifted at it. Sure, they could actually sell 800,000 units here by 2018, at least it probably sounds good in a conference room in Wolfsburg somewhere. But it’s also based on the supposition that the Hyundai-KIA group, a resurgent Ford, a refocused Toyota and a growing-feistier-by-the-minute GM (at least product-wise) are just going to sit on their hands and not do a damn thing to stop VW from doing it. And I can safely say that’s notgonnahappen.com.

And so into this volatile mix struts the Ultimate Answer to the Question that Absolutely No One is Asking - the next-generation Phaeton - the car that’s going to lead VW’s charge to greatness and dramatic new sales volumes in this market. Uh, how about no?

The Phaeton was dead in the water upon introduction before, and it will be again, because nothing has fundamentally changed for VW in this country. It’s still a maker of premium, fun-to-drive German vehicles notched below the lesser models of Audi, BMW and Mercedes-Benz, and there’s no amount of Piech tinkering of the Phaeton formula that’s going to change that.

It does make me wonder if anyone is really paying attention over at VW headquarters in Germany, or are they just waiting for the next whim/thought balloon to waft its way over from Piech’s office?

And that’s the High-Octane Truth for this week.

 

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