The Volkswagen Phaeton is somewhat of an enigma. For every year since its debut in 2002, the full-size luxury sedan has failed to reach its annual sales target of 20,000 units, with Volkswagen losing a reported €28,000 on each Phaeton made. This has caused analysts to call for its removal from the brand’s portfolio, with some calling the model the automaker’s “most irrational project”. VW stopped selling the model in the U.S. market after extremely underperforming sales figures, but has continued to market it in international markets, notably in Europe. Yet despite the Phaeton’s subpart performance both from a sales volume and profitability vantages, a generation Phaeton is coming.
Volkswagen has reportedly invested close to €2 billion in a second-generation model set to debut sometime in 2017 as a 2018 model year vehicle. It’s also rumored that the next-gen Phaeton will return to the U.S. while a new BMW 5-Series competitor bridges the gap between it and the Passat.
The automaker’s decision to continue pouring money into a loss-making endeavor is unusual, especially as it embarks to cut cost to the tune of €5 billion by 2017 as part of a new “efficiency program” to streamline productivity and increase efficiency within the Volkswagen brand.
“It’s no longer all about bigger, higher, further,” CEO Martin Winterkorn said during a December conference. “Now it’s about being leaner, faster, more efficient.”
As an automaker, Volkswagen is currently at a crucial crossroads as it continues to grow, being poised to become the world’s largest automaker and steal the title from Toyota, who has long held the crown. For its part, Toyota announced that sales of of its vehicles will fall one percent this year to 10.15 million units, putting it ahead of VW by only 10,000 units. Will a new Phaeton sold in Europe and in North America help make up that difference? We’re not convinced.