Saturday, November 22, 2003

What were the marketing geniuses at Volkswagen thinking with their introduction of the 2004 VW Phaeton? A luxury four-door sedan priced at between $64,600 and $79,900, the Phaeton "...represents [VW's] first foray into the luxury marketplace... execs believe the Phaeton will appeal to those drivers who want an 'unpretentious' luxury [vehicle]..."

Folks: it's... a... Volkswagen. Do you really think I'll spring for a Phaeton when I can buy a Lexus LS430 for nearly $10K less? What are these people thinking?

If they had done their homework, they would have realized the American market requires careful staging for these product intros. Hyundai is slowly but surely creeping upmarket, just as Honda (Acura), Nissan (Infiniti), and Toyota (Lexus) did so long ago. It's about perception, branding and creeping incrementalism. VW would have been far better off introducing a Phaeton W8 at a price point in the high 30's. Perhaps it wouldn't be a hand-built car, or have every bell-and-whistle. Perhaps their margins would be thinner. But they would be able to sell Phaetons, which is something I suspect will not happen today.

To wit, here are some selected luxury four-doors you can purchase for less than the Phaeton's MSRP's (source of prices is MSN's Auto site). All are luxury V8's that I would consider 'upmarket':

VM Phaeton W12 $79,900 <==
Mercedes S430 $72,600
Range Rover HSE $71,585
BMW M5 $70,400
BMW 745i $68,500
Audi A8 $68,500
VW Phaeton W8 $64,600 <==
Mercedes E500 $55,550
Lexus LS430 $55,125
BMW 545i $54,300
Lexus GS400 $47,825
Cadillac Seville $45,825
Infiniti M45 $38,990 [Est.]

My prediction: complete, humiliating disaster for the exec's responsible. Jobs will be lost, heads will roll. We can be sure of three things: death, taxes and the Phaeton not selling at these prices.

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