The Phaeton Lives On, Thanks To China

A university project I am working on recently got me reading about Ferdinand Piëch, the venerable chairman of the supervisory board of Volkswagen AG. One of the man’s radical ideas was that Volkswagen was to build a luxury saloon that can rival the best of any of its German rivals, but is understood never to be able to make any money. The Phaeton, as it was called, was to be the flagship of the company, the car to create the halo for the rest of its products, the car that the average Golf owner would aspire to.

Several factors worked against it. One is that the car was built on an entirely new platform that employed none of the parts and components of VW group’s other full-fledged luxury sedan, the Audi A8. Although this made the car truly unique, it also meant that VW faced impossibly high costs building the car, at volumes that were never going to create any economies of scale. Astoundingly, the Phaeton even had its own exclusive factory in Dresden, called the Transparent Factory, dedicated only for Phaeton production (even if it did, for a while, produce some of the Bentley range). Even when Bentley shared the components of the Phaeton in its Continental GT and Flying Spur, it was still by and large an extremely extravagant investment by VW. One interesting point to note is that while the Audi A8 relied on the Audi Space Frame as its unique selling point – an all-aluminum chassis that was by far one of the lightest in its class – the Phaeton instead went for a nearly all-steel construction, which meant that the Phaeton also weighed the heaviest among its direct rivals. This weight penalty delivered the Phaeton a disadvantage in terms of emissions standards, acceleration and braking figures and handling. Already, the car was starting to feel slightly behind the competition. Make no mistake though – that heavy weight did mean that the car felt extremely composed at speed and utterly indestructible. I know, because my family used to have one. Also, despite the lack of economic sense in the Dresden factory, it undeniably made my family feel like we were owning something truly special and bespoke. In an unusual way, it made us feel good that a company was building a loss-making product for the sake of building one of the best cars in the world.

The other factor weighing against the Phaeton proposition was that it wore the VW badge. Loosely translated from German as ‘people’s car’, Volkswagen was an unlikely candidate to become the brand behind the Phaeton. It was known for mass-produced, well-made cars – but not luxury. It was almost an anti-thesis of luxury. Surely the irony of a VW Phaeton was clear; as a business case it was heading for complete disaster. However, there is an argument that the Phaeton appeals to people who do not want to show off their wealth and who prefer to stay low-key. Perhaps. But it probably bothered many other people who were considering these luxury saloons – sales were dismal and near catastrophic, with the bulk of Phaetons going to its home market in Germany only and only a fraction of projected sales was achieved.


Ten years since the Phaeton was unveiled to the world, 2012 procures a very different prospect for the oft-claimed ‘failed’ product. Today China is the largest market for the Phaeton, usurping the EU and the United States. In 2010 VW delivered more than 3,000 Phaetons to China. Considering that the average annual production for the Phaeton is only 6-7,000, that is an impressive number and perhaps somewhat of a comeback for the car.

What gave the Phaeton this lifeline? I could only speculate, but if I may: VW has had a long presence in China and the brand is viewed differently from how it is viewed in the West. VW is a foreign brand, and by default all foreign brands are usually better regarded than domestic brands in Asia – culturally, VW has a stronger case for the Phaeton in Asia than it did in the western world. It is not simply a ‘people’s car’ in China; as a foreign brand it invokes images of prestige and quality because it is an ‘imported’ product. Surely, the made in Germany tag helps too. This might come as rather surprising as the Chinese are probably more brand-conscious than most.

The other guess I would hazard is that the Chinese usually like their cars long and large – which might explain why there are long wheelbase versions of the A6 and 5-Series in China – and the Phaeton is the car with the longest wheelbase and largest dimensions of any VW.

Given this renewed interest in the Phaeton, VW has given the car an extensive facelift in 2010 and it is no coincidence that they chose to orchestrate the launch in China. The Phaeton had been injected with some class-standard features, such as side-view cameras, a Google Maps integrated navigation system and more efficient engines. However, it is still a decade-old platform and its shortfalls next to its competitors is plain to see. Its interior, while built to an impeccable standard, still employs some sub-par plastics that belong in a much cheaper car. In an effort to update its technology, the interior has also lost a bit of its sense of congruence and order and traded it for a look that is, if I may say so, a bit messy. The exterior, largely unchanged and all the better for it, is probably the most durable aspect of the car against the test of time.


Looking back at the Phaeton’s history, it is difficult not to marvel at its continued existence today. Back in 2004 when my family acquired its black Phaeton 3.2 V6 in LWB guise, we were astounded by its value for money, its paintwork (still the best quality I have ever seen on any car) and its build quality. However, if you asked for my opinion now on the car, I have to admit that the car is simply outclassed by its more progressive competitors (it is however a terrific car to buy used). Nevertheless, as long as China continues its sterling demand for the Phaeton, we might see this car survive longer than we think.


The only writer to be based in Asia, James provides a refreshingly different perspective to the automotive industry with his unique experience of living in the Far East. He is a prolific journalist who has written for several leading automotive publications in Singapore, including Torque Singapore and REV Magazine Singapore. He believes in the thrill of driving and champions for an appreciation of driving pleasure above the horsepower race. In September 2010, James relocated to the United Kingdom, London, bringing him to a whole new environment from which to start a new chapter in automotive journalism.

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  1. I shared what James described about Chinese buyers, a sense of progress to own large -sized cars and foreign.

  2. I like that Britishism, ‘luxury saloon’.

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