(music) The Phaeton seems like an enigma. Why would Volkswagen, who’s name literally
means “people’s car”, make an expensive limousine? Just who was this car aimed at? But there is some method to the madness. Instead of a “people’s car”, think of
it more as a “people’s limousine”. The Phaeton was built on a Bentley chassis,
it drove like a Bentley and it was just as sumptuous throughout. But it cost a cool £75,000 less at “only”
£37,000. That was less than some Audi A6’s! So just how much is a fancy badge worth to
you? This is the Volkswagen Phaeton Story. (music) The Phaeton was the pet project of Ferdinand Piëch, the chairman and CEO of Volkswagen
Group. His grandfather was Ferdinand Porsche, the
founder of the famous motor company, so it’s natural he would start his career there. He worked on the 906 and laid the groundwork
for the successful 917. He then moved to Audi where he worked on the
Audi 80 and 100. In 1977 he initiated the development of the
rally winning Audi Quattro, using a 5-cylinder engine similar to the one he’d previously
developed for Mercedes-Benz as a side project. All this success, and some Machiavellian moves
in the background led him to become the chairman of Volkswagen Group in 1993. At that time VW was in deep financial trouble,
and Ferdinand staged a dramatic turnaround, making it one of the most successful car companies
in the world. To give you an idea of how successful it’s
become, here’s the 2019 revenue for Audi, BMW and Mercedes-Benz. That’s essentially the value of the vehicles
they sold. But what’s important to each company is
the profit they made. Audi is way more profitable, almost eclipsing
BMW. But BMW owns other car marques such as MINI,
so it’s fairer to compare VW Group, BMW and the Daimler group that owns Mercedes-Benz, and
this shows how much VW dwarfs both companies. This turnaround was instigated by Ferdinand
Piëch. He was responsible for the purchase of Bugatti,
Lamborghini, and for moving Audi upmarket. The 250mph 1000hp Bugatti Veyron was another
of his pet projects. He was also responsible for the purchase of
Rolls-Royce and Bentley. In 1998 the owners of Rolls-Royce, Vickers,
wanted to sell the company. BMW was the most logical choice as Rolls-Royce
used BMW engines, but BMW’s £340M offer was beaten by VW’s with £430M. Volkswagen now owned the two most prestigious
cars brand on the planet, and had beaten rival BMW into the process. But BMW had the last laugh. VW had purchased the Crewe factory, all the
blueprints and the necessary people and technology. But they’d missed one important detail – to
license the name “Rolls-Royce”. This was still owned by Vickers and was used
on their successful jet engines. BMW swept in and purchased the Rolls-Royce
name for much less than their original £340M bid – just £40M. And given that existing Rolls-Royce cars used
aging technology, VW would have to throw out all the existing equipment and start from
scratch. They’d got the Bentley name, but BMW had
got a name that was arguably more prestigious for around 1/10 of the price. To add insult to injury, BMW’s contract
said they could stop supplying engines for Rolls-Royce and Bentley cars with 12 months’
notice, and there wasn’t an obvious replacement, so VW could only make Bentley’s without
an engine until they ramped up a new model. But VW did have the Spirit of Ecstasy and
Rolls-Royce grille trademarks that BMW sorely wanted, so the two rivals entered into negotiations. VW would continue making Rolls-Royce’s for
the next 5 years to allow both companies to sort out this mess, and BMW would get their
trademarks. Despite Ferdinand claiming he’d only ever
wanted the Bentley name he wasn’t fooling anyone and had egg on his face from this expensive
deal. I’d like to imagine VW’s chief negotiator
was put in the stocks and pelted with rotten fruit outside of Volkswagen’s main gates! But putting blunders like this to one side,
Ferdinand was doing a bang-up job turning VW around. VW sales in the USA and indeed around the
world got a shot in the arm, due to projects under his watch like the fun VW Beetle reboot. So, when a Volkswagen limousine was mooted
in the late 1990s, no one was arguing when Ferdinand gave it the go-ahead. After all, most of what he’d done in his
career had turned to gold, so why not take Volkswagen upmarket with a halo car to help
sell its more reasonably priced models? There were other good reasons why this car
could be useful. Mercedes-Benz were moving into the mainstream
market with the A-Class. Volkswagen felt the quality of their cars
was as good as anything BMW or Mercedes-Benz made, so why not beat them at their own game
with a premium car? It was a sentiment other car makers were broaching
at the time as well, such as Honda who felt that their cars should be sold at a higher
price to denote their better quality, at least in Honda’s eyes. Of course, Volkswagen already had a premium
brand, Audi. In fact, after Ferdinand’s buying spree,
they had several. But surely Audi would be the natural fit for
this new car, which seemed similar to the A8 they already produced? But in Volkswagen’s eyes the A8 was a pure
drivers’ car, a competitor to BMW’s 7-series. The new car should be a laid-back limousine,
akin to the Mercedes-Benz S-Class or Lexus LS. To ensure the car was of the highest standard
Ferdinand Piëch set out 10 criteria that the car had to meet. Only two of them were ever made public – that
the car needed a high degree of torsional rigidity, and that the car could to be driven
at 300km/h for 24 hours with an outside temperature of 50°C and an internal temperature of just
22°C. The car was explored as “Concept D”. From the outside it looked like a hatchback
Passat on steroids, being 38cm longer and 16cm wider. It was launched at the 1999 International
Motor Show with a 313hp 5.0L V10 diesel engine driving all four wheels. It still used regular shock absorbers, but
the springs were replaced by air suspension. This is similar to hydro pneumatic suspension
seen in Citroën’s but uses air instead of fluid. Reaction to the car was good enough that Volkswagen
decided to take it to production. The car would share the same chassis as the
Bentley Continental GT and Flying Spur, and that chassis would be modified to create the
Porsche Panamera. VW had spent £500M renovating Bentley’s
Crewe factory, but the Phaeton, Bentley Continental GT and Flying Spur would be built at VW’s
newest, and most radical facility – the “Transparent Factory” in Dresden. It looked nothing like any previous car factory,
with glass letting in light from all directions, Canadian maple floors and a clinical, almost
sanitary atmosphere. Car parts rolled along on autonomous sleds,
and even moved up and down floors on elevators to the next stage of production. Customers could watch the 550 workers while
they assembled their vehicle, and VW even offered customer vacation packages. Once the car was produced it could be stored
in the rotunda by robotic lifters until it was needed. The Transparent Factory was also a cultural
mecca, hosting orchestral and operatic events. This was a factory unlike any other, but with
just 28 cars leaving the door every day, not one for mass production. The name for VW’s extraordinary new car
would be the “Phaeton”. The name came from light, sporty horse drawn
carriages from the 19th century. They were dangerous, so were named after the
son of the Greek god Helios who met his doom trying to master the wild sun chariot. 20th century Phaeton automobiles started out
as fast, light, open top vehicles but by the time Audi predecessor Horch produced their
Phaeton in the 1930s it was more of a grand tourer. The Volkswagen Phaeton certainly wasn’t
light or dangerous, but for its weight – 2500kg – it was relatively fast. 60 could be reached in just 6 seconds, and
it would go on to a rumoured unlimited top speed of over 200mph. The Phaeton would also be the most luxurious
People’s car ever produced. Volkswagen chose the finest quality wood and
leather for the interior. The massaging electric front seats were air
conditioned. The heating could be individually tailored
for each of the Phaeton’s four occupants, and a dehumidifier prevented the windows from
fogging up. The entertainment system used a large colour
screen when these were a relative luxury, offering an excellent audio system, navigation,
phone integration and TV reception where it was allowed. Mechanically, all cars were four-wheel drive,
using a V10 diesel, or a V6, V8 or the wild 6.0L W12 petrol engine. Depending upon the engine, the car used either
5 or 6-speed automatic gearboxes. Some of the engines and transmissions would
be shared with the Audi A8. And as with the Concept D, the car rode on
air suspension. The Phaeton was also offered as a long wheelbase
version that was stretched by 12cm to offer more rear legroom. And those rear occupants would get their own
climate controls. VW would probably have called the styling
“refined”, but in reality, it was a little bland; a conservative shape that was designed
to offend as little as possible. The Phaeton was launched in 2002 to European
customers, and it was slowly rolled out to international markets. The press were amazed at the car, but many
wondered just who this car was designed for. It’s flattering to compare the Phaeton to
the much more expensive Bentley Continental GT that would be released a year later. But customers weren’t making those comparisons. Despite the Phaeton being more a leisurely
grand tourer, it was compared to the BMW 7-series, Mercedes-Benz S-Class, Lexus LS and indeed
VW’s own Audi A8. It could still beat each of them on price
while offering the same level of refinement, but the power of a luxury brand badge is strong,
both in aspirational value for the owner and resale value for the car. The Volkswagen badge just didn’t have the
cachet customers were looking for. Sales were a disappointment. The Transparent Factory had a capacity to
make 20,000 cars a year, but Phaeton yearly production never got much higher than 6,000. In Europe the sales were strongest in VW’s
home market of Germany. Abroad the car was a massive flop in North
America, being only sold from 2004 to 2006. But the Phaeton found most success in China
and South Korea where customers were happier to accept the Volkswagen badge on a premium
car. A smaller 3.0L V6 diesel engine arrived in
2004, and in 2005 Volkswagen investigated the idea of making an even longer limousine
version with the Phaeton Lounge. It featured seating for 6, with 2 pairs of
rear seats facing each other. Those passengers got a minibar, wine coolers,
a cigar humidor and a plethora of monitors with a DVD system. This was a world away from Volkswagen’s
first car. It was launched at the Middle East International
Motor Show, but there wasn’t sufficient demand to take it further. An update in 2007 gave the car automatic distance
cruise control which included a front assist collision avoidance system and a lane change
assistant. The entry-level petrol V6 got a performance
boost that brought the 0-60 time down below 9 seconds. The daytime running lights were changed to
use LEDs and joined the rear lights that already used them. And finally, the CD navigation system got
a bump in capacity as it was swapped for a DVD system. The following year another update appeared
with a multimedia system that stored music on a 30GB hard drive. The car got a rear-view camera as well as
a freshened centre console with revamped controls. Just two years after that, in 2010 it got
yet another facelift, this time marketed as “the new Phaeton”. The changes and launch were supposed to be
much grander, but the 2009 economic crisis put paid to that. It showed the importance of the Chinese market
that it was launched at the Beijing International Automotive Exhibition. The front grille and rear lights were changed
to match VW’s current styling. As far as gadgets went, it got 3G mobile internet
and traffic sign recognition. Shortly after that the top of the line W12
engine ended production, presumably because of low demand, leaving the V8 as top-of-the-range
engine. The final update appeared in 2014, but the
changes were minor, probably just to keep up with the changes in engine technology that
had been developed for other cars in the VW range. Volkswagen was going for bullet-proof reliability. A higher quality than their usual cars. However, despite this goal there were still
problems, and although you weren’t paying Bentley prices to get them fixed at your VW
dealer, you weren’t paying VW Passat prices either. And with all those luxury features, there
was a lot to go wrong, which meant the used market was going to be severely depressed. Maybe that’s why you can buy a Phaeton today
for less than £2,000! And if you, like me, are thinking that’s
a tempting idea for a cut-price Bentley, remember you’re buying a car with 2004 tech in it. Forget about Apple Carplay or Android Auto,
and the built-in navigation system likely won’t know about any roads built after 2004
if the CD-ROM map data disc will still read. The Phaeton cost Volkswagen millions and it
never returned that investment with lacklustre sales throught its life. It’s very similar to another pet project
of Ferdinand Piëch – the Bugatti Veyron. That launched around the same time and also
lost money. It’s been estimated that VW lost £25,000
on each Phaeton it sold, but that pales into insignificance when you realise that they
lost £4M on each £1M Bugatti Veyron. Yet the Veyron was hailed as a big success
for VW and Bugatti, and sparked the 300MPH successor, the Bugatti Chiron that I have
to say makes a rather good Lego model! Yet the Phaeton was seen as one of Ferdinand’s
rare failures. By the time the car launched he’d retired
as he was required to do by German law when he reached 65 years of age. Yes the Phaeton lost money, but how many additional
sales did Volkswagen gain from having the Phaeton as a halo car to boost its prestige? The Phaeton ended production in 2016. A replacement was rumoured to be ready in
the wings but was cut with the chaos that surrounded the dieselgate cheating scandal. The last Phaeton stayed at the Transparent
Factory and was signed by all the workers, to mark the end of this truly amazing vehicle. As this was the middle of dieselgate, it’s also been suggested that Phaeton production ended to allow the Transparent Factory to
be turned over to focus on face-saving electric car research and production. Soon it was pumping out electric Golf’s
and the ID.3, but at a low volume of just 70 cars a day. With the Phaeton selling moderately well in
China, VW produced a replacement of sorts as the China-exclusive Phideon. Rather than the Bentley chassis, the new car
was based on the more humdrum Audi A6, and would be produced in China. A first for Volkswagen cars, it was equipped
with it’s very own ghost detector, helping to reduce the terrible number of ghost fatalities
on the road every year. Will there be another Phaeton? There have been rumours Volkswagen will recreate
the Phaeton as an electric car with the I.D. Vizzion shown in 2019. The Phaeton was Volkswagen’s experiment
in making a “People’s limousine”, but who wants a limo when you can’t afford a
driver? It was a sales disaster, but the halo car
and its special Transparent Factory helped to further raise VW’s standing as a carmaker. It was the vision of its autocratic leader
Ferdinand Piëch, who got more right than he got wrong. Although that’s it for the Phaeton story,
while I was researching this video, I found a couple of interesting stories about Ferdinand
Piëch. Like many transformative leaders, Ferdinand
Piëch was, to be diplomatic, a difficult person to be around. He was abrasive and had problems in social
situations. While working for Audi he met with the Emperor
of Japan and was shown one of the Emperor’s swords. Ferdinand examined it and bluntly told the
Emperor it was a fake. The Audi team forbade Ferdinand from taking
part in any other public events during that trip, which incensed Piëch, as he was there
to promote the Audi Avus quattro that he had a large part in creating. Subsequently the Emperor had sword examined
by experts who discovered it was indeed a fake. Bob Lutz, one-time president of Chrysler once
asked Piëch how he achieved tight body tolerances on Volkswagen cars. Piëch recounted a story that he pulled all
the top body engineers and their staff into his office. He gave them an all ultimatum that they’d
be fired if all of VW’s cars didn’t have 3mm body tolerances within just 6 weeks. Sure enough, they met their goal. So, when your manager does something that
annoys you, thank your lucky stars you’re not working for someone like this! This may also explain the corporate culture
that allowed something like the dieselgate scandal to happen. If you have to get something done, no matter
what, you will do anything! I know, this is the moment when you turn me
off. You don’t want to hear me banging on about
subscriptions and Patrons. But there are links, you see, there are links
you can click on these if you want, or subscribe down there. Err, but fair enough, whatever, you do your
own thing, I’m off!
