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…