Experts within the automotive industry have expressed their surprise concerning Volkswagen's decision to keep offering the Phaeton.

Experts within the automotive industry have expressed their surprise concerning Volkswagen's decision to keep offering the Phaeton.

Volkswagen spent more than $1 billion to develop the Phaeton but the model never hit its annual sales objective of 20,000 cars. According to Bernstein analyst Max Warburton, VW's flagship model is one of the three "most loss-making European cars of modern times." He went on to specify Volkswagen lost €28,000 on each car sold in the 2002 - 2012 period so it's hard to understand why they are keeping the model alive and even confirming a second gen will be out in 2017 or 2018.

It contradicts with Volkswagen's objective to make annual cost savings of €5 billion at its passenger-car division as part of an "efficiency program" which is being characterized by CEO Martin Winterkorn as a “painful action” to get VW back into shape after profit margins have dropped due to an increasing number of models and parts.

For a lot of people it doesn't make sense to keep the Phaeton alive and develop a successor which apparently will be positioned as a Mercedes-Benz S-Class rival and could spawn a plug-in hybrid derivative. Such a high-end product would be far more suitable to receive an Audi badge rather than being labelled as the "people’s car."

Volkswagen Group of America Michael Horn was asked by Reuters during NAIAS about the potential of a second-gen Phaeton in United States and his response was "That's a dangerous question. It's an image bearer with no relevance for volume.” Research firm IHS Automotive estimates VW will sell an average of 11,900 units of the Phaeton II each year in the 2017-2020 interval.

Stefan Bratzel, head of the Center of Automotive Management, says a new Phaeton will cannibalizes sales of high-end products such as the next Audi A8 so he believes "it doesn't make much sense strategically” as the "business case is equally questionable."

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