VW Phaeton: The Ultimate How-Not-To Guide for Marketing, Branding and Product Positioning

Getting Even is a Bad Marketing Strategy

The Phaeton has been one of the most humiliating episodes in the life of VW, second only to getting caught cheating in emission tests. The car’s production never came near the target of 20,000 a year — just 85,000 Phaetons were made over 15 years. Worse, the company lost almost 30,000 Euros on every Phaeton it built, making it one of the costliest failures in European automotive history.

Mercedes used the 1997 Frankfurt Auto Show to unveil its new A-Class that was clearly aimed at VW’s traditional market. The story goes that VW chairman Ferdinand Piëch was furious and decided to retaliate by building a VW that would take on Mercedes on its luxury turf.

Piëch was the grandson of Ferdinand Porsche, and a colossus of the German car industry who made Porsche a major force in motor racing in the 1970s, turned Audi into a competitor to Mercedes and BMW in the 80s, and lead VW into a bright new post-Beetle future.

Piëch’s design brief for the Phaeton was for a car that could not only compete with Mercedes‘ S-class, but beat it at its own game. That meant the car had to embody every conceivable technology and luxury then available: it offered a W12 engine, radar adaptive cruise control, adaptive air suspension, advanced air-conditioning and a cabin that oozed luxury. The Phaeton was to be the most advanced car in the luxury segment, as well as the most comfortable and reliable.

Dumb Names Kill Cars

A furious chairman does not make a great basis for a winning marketing strategy, but Piëch was a man used to getting his way. The weekly magazine Der Spiegel once described the work environment at VW as ‘North Korea without the labour camps’.

The marketing brains at VW fell into line, of course, perhaps without first checking their Greek mythology. Bad mistake. Phaeton was the son of Helios, the Sun God. When he let his offspring drive his chariot across the sky one day, Phaeton couldn’t control the horses so they strayed off their usual course. As a result, the chariot scorched the earth and all the crops, and the heat killed all the animals as well. In…