VW's costly White Elephant

[niky]

RANTS by Peter M. DeLorenzo

Piech's Folly continues to haunt Volkswagen.
Detroit. Well, that was special. With the VW Phaeton being fazed out of the U.S. market by next summer, the dismantling of Ferdinand Piech's ill-fated and disastrous strategy to take the Volkswagen brand up-market is well and truly underway. Wolfgang Bernhard, the ex-Chrysler group and Mercedes-Benz star who inherited the mess that Piech left, knew before he even started at VW that the Phaeton would have to go. "Piech's Folly" was the doomed strategy hatched whereby the then-VW chairman envisioned VW taking on Mercedes-Benz and BMW at the top of the luxury-performance food chain. The Phaeton was to be Piech's star-studded platform to showcase the VW brand as being worthy of being mentioned in the same breath as the two German automotive superpowers, but instead, the Phaeton became nothing more than a monument to his maniacal, ego-driven delusion. The Phaeton was not only the answer to the question that absolutely no one was asking, it was a rolling testament to just how far one person's dominance at the top of a company - if it's the wrong person - can have a devastating effect for years to come.
It didn't have to be this way, of course. Ferdinand Piech, the grandson of Ferdinand Porsche, was one of the most gifted automotive engineers of his generation. Responsible for some of the most famous Porsche racing cars in history, including the 908/3 and the 917 just to name a few, Piech's talent was undeniable. But as is so often the case, a talent for one part of the automotive business does not necessarily translate to Big Picture managerial skills - and Ferdinand Piech was the poster boy example of this phenomenon.
In his blind pursuit of fame and glory for VW in the luxury-performance arena, he completely took his organization's eye off of the ball and crippled the brand for years to come. Instead of having his designers and engineers focus on VW's core automotive products (Jetta and Golf), Piech dispatched legions of his underlings to chase his pipedream of automotive immortality. And while the entire VW organization tried to prove the mettle of Piech's Folly, the predictable result ensued - the core products suffered, VW quality scores plummeted, and the U.S. dealers bore the brunt of Piech's misguided crusade.
The new Golf and Jetta weren't just late to the U.S. they were several model years late. And to make matters even worse, VW dealers were fending-off irate customers who were saddled with quality problems from the get-go. And those customers rewarded VW for their callousness by abandoning the brand in droves - never to come back.
But the ultimate insult to VW's U.S. dealer body was the fact that the Phaeton appeared to have been created on a whim, with no rhyme or reason given to the fact that not only would the Phaeton be a dramatic leap upward in price and class for the VW dealers, it would be coming out of left field for VW's core customers. But as VW dealers and the rest of the automotive world would soon find out, the Phaeton was created on the whim of one man - Ferdinand Piech. A man who was accountable to no one and whose misguided "vision" would almost destroy an entire company. It's truly remarkable how similar Piech's situation was to Juergen Schrempp's tenure at Mercedes-Benz - two uber powerful men with no accountability and runaway delusions of grandeur on top of it. A classically lethal combination if there ever was one. As we say around here - "NVG" (Not Very Good).
But Piech's grand plan for the VW brand had another sinister dimension to it that threatened to have even more dire consequences: it completely ignored the fact that taking VW up-market in the U.S. would seriously undercut Audi's position in this market. Audi was finally starting to show sustained progress after taking years to recover from the "60 Minutes" unintended acceleration debacle, and now here was Piech, with his strategy to have VW competing against Audi in the North American market - making absolutely zero sense to anyone outside of his immediate agreeable entourage.
The rest, as they say, is history. Piech was kicked "upstairs" to become chairman of VW's all-powerful Supervisory Board - a position where he has proved yet again that his delusional thought patterns are still intact, as he continues to wreak havoc on VW by helping orchestrate Porsche's increase of its ownership percentage of VW, unleashing a conflict of interest can of worms that defies description. The guy just doesn't know when to quit, which is why there's a growing disenchantment with Piech's presence on the VW Supervisory Board.
As for the Phaeton, it was delivered to tepid reviews. Overweight, overwrought and over-burdened with enough technology to confuse even tech geeks for days, the Phaeton was a car in search of a brand - because absolutely no one bought that the VW logo belonged on the front of it. In short, there was never a business case for the car - except in Piech's inflated head.
The Phaeton was the wrong car from the wrong company at the wrong time. Which, come to think of it, matches its "visionary" creator perfectly, because Piech was the wrong guy at the wrong car company at the wrong time.
Piech was allowed to pursue his "Folly" to the detriment of an entire company, and his corrosive "vision" will continue to haunt VW for years to come.
Thanks for listening, see you next Wednesday.

It's something about VW that's been bugging me for the past five or six years, and it's good to see that they're pushing VW back in the right direction.

 

[Ev0]

I think the author of that article overstated himself a bit. While it is true the Phaeton was a flop (I'm glad to see it go from a business perspective), the car did not almost ruin VW (Unless I am mistaken). It is true VW is struggling in the US, but I don't think it was like the doomsday scenario that was described in the article. Although VWs have had some quality issues lately (My instructor's '03 Golf is a perfect example of this).

 

[Young_Warrior]

Other than the article author jumping the gun abit about VW's current situation I too am really vexxed at Piech. The mans a idiot any one with half a brain would see that you cant go taking Volkswagen upmarket up and above even audi and going by some of the upcoming models VW have which such as their interpretation of a CLS and several other platforms of cars designed to go head to head with Mercedes I think the VAG group might fall into serious trouble hence Porsche might having to bankroll the company to keep them alive over the next decade.

All these high and fancy cars they have coming up should be badged as audi's and some of the more exotic saloons and coupes maybe badged as bentleys. The mans off his head and hes going to bring VAG down. I hope that audi leaves them behind and takes lamborghini and seat with them as other wise I can see some hardship in to company for the future.

Volkswagen has been the largest European car maker since the 70’s. Under the leadership of Ferdinand Piech, it expanded aggressively during the 90s. Apart from Audi and Seat, Skoda, Lamborghini, Bentley and Bugatti were also absorbed into the empire. Piech, who served Porsche and Audi before, succeeded to put Audi onto rails to target BMW, upgraded the build quality and image of the Spanish Seat and Czech Skoda. However, his effort to put the Volkswagen brand against Mercedes did not take off, as shown in the poor sales of Phaeton, its first luxurious car. The Bugatti supercar project is another unwise decision - it makes no business sense to Volkswagen and it takes the company too much resources to overcome the technical difficulties to realize its 252mph target speed. Piech got over-ambitious in his latter days.

Piech was succeeded by ex-BMW boss Bernd Pischetsrieder in 2002. The latter rationalize the strategy. He abandoned the plan to move Volkswagen brand upmarket and concentrated on catching the market trend such as compact MPV and SUV. He delayed the Bugatti project, killed the "Super Passat" and Volkswagen W12 supercar. This seems clever than his predecessor.

Volkswagen group used to be a keen believer to platform sharing strategy. Almost all cars from its four mainstream brands shared the four common platforms. This inevitably made the cars too similar. Under the leadership of Bernd Pischetsrieder, the group splits into two management groups - the Volkswagen group (consists of VW, Skoda, Bentley and Bugatti) and Audi group (consists of Audi, Seat and Lamborghini). This intents to differentiate the characters of their cars - the VW group cars are more conservative, while the Audi group cars are sportier. The first sign was shown in the 2005 Passat, which switched from Audi A4 platform to Golf platform.

 

[Danny]

That's a shame. The VW Phaeton is one seriously underrated car.

 

[Tornado]

You do have to think of it the other way though. Yes, the Phaeton was an overpriced, underappreciated car (albeit a very nice one), but the advances made to every other VW car (particularly the Golf) in ways of interior quality and overall durability aren't anything to cry about. Remember, if you will, that when Piech came to power at VW they were near bankruptcy. Like, next ot death. I personally think this guy has too much of a target for Peich. I mean really, yes, it was just a heavy, cheap Audi. Audi's aren't exactly the prettiest of cars anymore. And Mercedes are constantly having electrical niggles. And BMW has iDrive. When compared to the other German cars, the Phaeton doesn't actually look that bad.

 

[Wolfe]

Turning Volkswagen into an upscale brand is like making a Hummer-sized Mini. Going against your company's own freakin' name is just silly, and the public is not going to buy it, figuratively and literally.

 

[niky]

Whatever the beef with Piech, I've had the feeling for a long time that Volks was seriously off its rocker. From a company that gave us relatively cheap and good driving upscale-feeling cars, they've turned into Audi. And that's not a good thing for either VW or Audi.

Heck, the Phaeton is probably a wonderful car, but it's definitely got the wrong badge on it.

Nissan, Toyota and Honda responded to the need to go upmarket by creating separate lines (namely Infiniti, Lexus and Acura). This keeps the core business focused and intact, while providing more flexibility to the product line. Volkswagen didn't need to do this, they already had Audi. So why turn the "core" business, VW, into another Audi?

 

[TheCracker]

Not another Veyron thread!




....oh, sorry, its about the Phaeton is it.

 

[Young_Warrior]

You do have to think of it the other way though. Yes, the Phaeton was an overpriced, underappreciated car (albeit a very nice one), but the advances made to every other VW car (particularly the Golf) in ways of interior quality and overall durability aren't anything to cry about. Remember, if you will, that when Piech came to power at VW they were near bankruptcy. Like, next ot death. I personally think this guy has too much of a target for Peich. I mean really, yes, it was just a heavy, cheap Audi. Audi's aren't exactly the prettiest of cars anymore. And Mercedes are constantly having electrical niggles. And BMW has iDrive. When compared to the other German cars, the Phaeton doesn't actually look that bad.

A heavy cheap audi Were you getting all this stuff from. The phaeton was a limo which was considerd as better than what audi mercedes and bmw had to offer respectively with the A8,7 series and S-class.

Audis are very pretty to the point that theyre winnign a bunch of awards especially for the A6 and A8. Mercedes doesnt have constant electrical niggles and some people like I-drive and others dont. Most people wouldnt have it as a deciding factor to their cars.

 

[Danny]

Were you getting all this stuff from..

Rich statement of the year!

 

[Young_Warrior]

Rich statement of the year!

 

[Danny]

I refer you to the 50 Cent thread...

 

[Young_Warrior]

I refer you to the 50 Cent thread...

 

[Duke]

I refer you to the 50 Cent thread...

Or the "GM Bankruptcy" thread, or the "Z06" thread, or...

 

[Blackbird.]

...every thread?

 

[Young_Warrior]

Or the "GM Bankruptcy" thread, or the "Z06" thread, or...

I wonder how those outcomes would have been on a more balanced forum...

 

[Duke]

"More balanced"?

I wonder how those outcomes would have been if you knew what you were talking about.

 

[Young_Warrior]

Tell that to a balanced forum. No offense but the stuff you guys sometimes come out with is the opposite of that on other forums. I cannot stress the S on the end of forums enough)

 

[niky]

A heavy cheap audi Were you getting all this stuff from. The phaeton was a limo which was considerd as better than what audi mercedes and bmw had to offer respectively with the A8,7 series and S-class.

Dude... those other forums must be run by your homies. If nobody agrees with you, please... please think about what you're saying before you reply. Every time you get into it with Duke or any of the others, you just seem to dig yourself deeper in.

Yes, the Phaeton is a very very nice car. That doesn't change the fact that it IS A CHEAPER AUDI. It's the car VW shouldn't have built. It would be like Toyota building a Toyota Crown in the US with the exact same specs as the Lexus GS, with a different pricetag. The Crown is a nice car, but why bother selling them side by side? IT DOESN'T MAKE SENSE AT ALL.

 

[Wolfe]

Dude... those other forums must be run by your homies. If nobody agrees with you, please... please think about what you're saying before you reply. Every time you get into it with Duke or any of the others, you just seem to dig yourself deeper in.

Yes, the Phaeton is a very very nice car. That doesn't change the fact that it IS A CHEAPER AUDI. It's the car VW shouldn't have built. It would be like Toyota building a Toyota Crown in the US with the exact same specs as the Lexus GS, with a different pricetag. The Crown is a nice car, but why bother selling them side by side? IT DOESN'T MAKE SENSE AT ALL.

I'd liken it a little more to Daimler-Chrysler deciding to make a Maybach clone called the Plymouth Charleston.

 

[niky]

That'd work. No, maybe the Chrysler Dreadnought... based on the Maybach.

 

[Young_Warrior]

Dude... those other forums must be run by your homies. If nobody agrees with you, please... please think about what you're saying before you reply. Every time you get into it with Duke or any of the others, you just seem to dig yourself deeper in.

Yes, the Phaeton is a very very nice car. That doesn't change the fact that it IS A CHEAPER AUDI. It's the car VW shouldn't have built. It would be like Toyota building a Toyota Crown in the US with the exact same specs as the Lexus GS, with a different pricetag. The Crown is a nice car, but why bother selling them side by side? IT DOESN'T MAKE SENSE AT ALL.

My homies? More like a forum with less biased one way views, less sucking up and more truth.

And no the phaeton has more in common with a bentley continental that any audi....actually. So not really a cheap audi is it now? No I didnt think so.

 

[Wolfe]

And no the phaeton has more in common with a bentley continental that any audi....actually. So not really a cheap audi is it now? No I didnt think so.

Then let's call it a cheap Bentley. 'Cause, you know, that changes everything.... 💡

 

[Tornado]

A heavy cheap audi Were you getting all this stuff from... Mercedes doesnt have constant electrical niggles and some people like I-drive and others dont. Most people wouldnt have it as a deciding factor to their cars.

Well, you know, the curb weight, and, umm...price tag. Also, Mercedes don't have electrical niggles? Then why did they recall all of those cars last year due to brake problems (which are heavily run throughout the electrical system). And why does just about every single magazine that has had a long term test of a newer Merc had a long term test on a car had electrical problems? You are right on the last thing though. At least 1.2% of all current BMW 7-series drivers love iDrive, so you are technically right. Of that 1.2%, 1.0% are masochists and the other 0.2% are chaffuer driven.

 

[niky]

Then let's call it a cheap Bentley. 'Cause, you know, that changes everything.... 💡

@Toronado: My cousin has a new 750... he never drives... I've got to find out if he knows how to turn on his radio...

@Young Warrior: Sucking up? Heck, Wolfe and I disagree quite a lot... I hardly ever agree with what Famine says, and we're all sucking up? I beg to differ. I think this forum is full of born arbitrers.

 

[Delphic Reason]

@Young Warrior: Sucking up? Heck, Wolfe and I disagree quite a lot... I hardly ever agree with what Famine says, and we're all sucking up? I beg to differ. I think this forum is full of born arbitrers.

Amen to that...

I hardly ever fully agree with anyone on this forum... You don't see me whining about it though...

Young Warrior, if other forums are more balanced, by all means, spend your time there... Although, we would miss the unintentional comedic atrebutes of 99.9% of your posts, I'm sure we would get over it eventually...

Back on topic...

I would agree with most in this thread... The Phaeton, while beautiful and technically a very good car, it's just not marketable in the states with Audi's already filling that whole in the market... I would love to see VW go back to the MK1 and MK2 days... The 89-92 Jetta GLI and Golf GTI were fantastic lightweight vehicles... Handled like go carts, and accelerated to redline with ease...

With every year, VW's seem to get larger and larger... The new Jetta is almost as big as the MK3 passat (maybe larger)... I think a retro MK2 Golf Rallye would be the direction to go... Small, economical, good mileage, and with a few mods can seriously move... Lighter is better, Volkswagen... It's time to start losing some weight...

 

[TheCracker]

... I would love to see VW go back to the MK1 and MK2 days... The 89-92 Jetta GLI and Golf GTI were fantastic lightweight vehicles... Handled like go carts, and accelerated to redline with ease...

With every year, VW's seem to get larger and larger... The new Jetta is almost as big as the MK3 passat (maybe larger)... I think a retro MK2 Golf Rallye would be the direction to go... Small, economical, good mileage, and with a few mods can seriously move... Lighter is better, Volkswagen... It's time to start losing some weight...

In South Africa, VW still make a hybrid mk1/mk2 Golf GTi (although i dont think it's called the Golf) which is sub 1000kgs yet has a modern 'parts bin' interior. They sell it very cheaply and it costs little to insure or fuel since it has a 1.6 engine like the original GTi.

I'll google it and try to find a link...

*Edit*
It's known as the Citi Golf 'VeloCiTi 1.6i':
http://www.vw.co.za/models/model_detail.jsp?modelName=citiGolf

A Mk2 front with a Mk1 back with what looks like a Modern Polo or Lupo interior - those crazy SA's!

 

[Young_Warrior]

@Young Warrior: Sucking up? Heck, Wolfe and I disagree quite a lot... I hardly ever agree with what Famine says, and we're all sucking up? I beg to differ. I think this forum is full of born arbitrers.

I never ment you but rather some other people. Usually those of a younger age.

Also, Mercedes don't have electrical niggles?

You said constant. Not one.

At least 1.2% of all current BMW 7-series drivers love iDrive, so you are technically right.

And who exactly drives the 7 series. Usually old men whose brains have long started to decline. If im not mistaken the 7 isnt the only car with I-Drive and they seem to sell just fine.

Well, you know, the curb weight, and, umm...price tag

Ye its a cheap bentley.

 

[niky]

And who exactly drives the 7 series. Usually old men whose brains have long started to decline. If im not mistaken the 7 isnt the only car with I-Drive and they seem to sell just fine.

I beg to differ. My cousin rides a 750, and he's only 30. His old man rides a Jag.

 

[GilesGuthrie]

I always thought that Phaeton was more an engineering proof of concept than an actual attempt to build a big-seller. In the same vein as Veyron, really. You'll note that each car is significantly divorced from other vehicles that it may damage. I mean, nobody sniffing around an A8 would seriously consider buying a VW. It was more about proving that VW could build an uber-car, than it was about trying to convince people to buy it.

VW have long been into building radical concepts, and then just building another Golf, so the only interesting thing about Phaeton is that it actually made it to production.