as an incentive to get my parts order straight!

Personally I agreee with him but was a huge lapse in judgement to allow himself to be quoted on this one.

VW Overestimated Brand Reach, U.S. Audi Exec Says

VW may return to building more affordable vehicles, after the lackluster reception for the Phaeton luxury sedan.

San Francisco - Volkswagen AG's efforts to expand the VW brand into the luxury segment may have been a mistake, Audi of America Inc.'s top executive says.

The comments are the latest evidence of a tussle within the VW Group, where executives appear to be second-guessing the launch of the up-market VW Phaeton luxury sedan.

The Phaeton has been a disappointment for the VW brand, with sales this year in the U.S. totaling only 1,433 units through October, according to Ward's data. The auto maker earlier said it expected to sell upwards of 2,500 units of the luxury sedan in the U.S. in 2004. If October's total volume of 305 units is a proper barometer, it appears Phaeton sales may reach only the 2,000-unit level.

Now, one of auto maker's top U.S. officials is publicly questioning whether the move was too ambitious.

"I think Volkswagen underestimated the weakness of their brand in the luxury segment," Audi of America head Axel Mees tells reporters here during a media rollout of the 2005 A6. "I think they realized the Phaeton... was a first step too fast into a direction they wanted to go.

"VW overall isn't ready to offer successfully cars in that price range, whatever they do," he adds. "It can be the best car (but) I still will not buy it because it has a VW logo." Mees says executives in charge of the brand at the time of Phaeton's development, most notably CEO Ferdinand Piech, were zeroed in on the wrong aspects of the VW organization when they developed the sedan.

He says the leadership was too focused on the engineering side of the business and the need to develop a top-notch luxury vehicle for the VW brand.

"He (Piech) wanted to prove he could build a good car. He didn't look at the marketing aspect, the brand aspect," Mees says.

VW also suffered from a long-standing image that relied on more affordable products, including the Jetta and Golf, the Audi executive says, adding that many VW dealers were ill prepared to meet the needs of luxury-vehicle buyers. They had a history of dealing with customers spending around $20,000 for a vehicle, not those willing to spend upwards of $80,000 or $90,000, he says.

"They overestimated the power of the Volkswagen brand," Mees says.

It is likely VW will shift its focus in the coming years and return to its roots: building high-quality, affordable cars, and potentially leaving the luxury side of the business to the Audi brand, Mees says.

"The VW model range will be gradually going down (range)," he says. Whether VW now will leave the luxury sector to Audi "is too early to tell," he adds.

Both brands will do better if they create more of a differentiation between the lower and upper market segments.

medium and low end priced cars. Many have found that the Phaeton is superior to the big Audi in engineering, interior detail, and ride and comfort. It seems to me they should lose the "VW" badges on the Phaeton. That in and of itself would improve sales. If they needed to do more to carry this car until it gets "discovered," they could sell the Phaeton as the upper end of the Audi line, or, incorporate its superior assets into the A8. If they did that however, the V8 model would sell for $90K. IMHO that is how good this car is. Ok guys, flame me.. . I'll set here with my extinguisher at the ready.

Let's see "I wouldn't buy a VW and the CEO is focusing on the wrong things". He was askin to get axed. Must be a rivalry between VW and Audi brands here that they wanted squashed, I thought the sales numbers for Audi's were marketdly improved this year which obviously didn't balance out this misstep. Total speculation...

Lack of foresight!!!!

...a capable executive for something so dumb.

in more ways than one apparently...

Randy,

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