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VW Phaeton to return to US

By Andreas Cremer (China Daily)
Updated: 2010-08-20 13:40

BERLIN - Volkswagen AG plans to bring back the $85,000 Phaeton to the United States, where the sedan flopped and was withdrawn in 2006, as part of the German carmaker's aim of tripling its share of the world's second-largest market by 2018.

"We have our eyes firmly set on the US market," Juergen Borrmann, director of Volkswagen's plant in Dresden, Germany, where the Phaeton is built, said in an interview. The model will be completely redesigned and retooled before VW begins selling the high-end sedan in the US again, he said.

Former CEO Bernd Pischetsrieder pulled the Phaeton from the US four years ago after the car failed to meet sales goals and called a 20,000 global target a "pipe dream".

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His successor, Martin Winterkorn, later threw his full support behind the model and announced plans to keep the Phaeton. Sales last year fell 27 percent to 4,500 cars.

"The US is a most lucrative market for high-end sedans and VW has to tackle that potential if it wants to credibly expand its US presence," said Willi Diez, head of the Nuertingen, Germany-based Institute for Automobile Industry, a state-funded think tank.

Volkswagen's preferred shares gained as much as 1.27 euros, or 1.6 percent, to 79.30 euros and were up 1.1 percent as of 10:55 am in Frankfurt trading. The stock has advanced 21 percent this year, valuing the Wolfsburg, Germany-based carmaker at 35 billion euros.

Volkswagen this year is introducing an updated Phaeton, which has new front and rear sections, an interior upgrade and a wider selection of engines, as part of the model's first overhaul since 2007. The face-lifted Phaeton entered European showrooms in June and goes on sale in China next month.

VW, Europe's biggest carmaker, plans to reintroduce the Phaeton in the US when the next generation of the model comes to market, Borrmann said in the Aug 17 interview, declining to give a timeframe.

Headed for its eighth straight annual loss in the US, VW aims to almost triple the carmaker's share of the US market to 6 percent by 2018 and boost deliveries to 1 million cars, including the Audi luxury unit.

Bloomberg News