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Why The Volkswagen Phaeton Failed In The United States

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The term Volkswagen means “people’s car” in German. In the United States the car company is known for selling stylish, well-engineered cars that are still relatively affordable like the Volkswagen Golf, Passat, and Tiguan. But there was at least one time Volkswagen tried to elbow its way into the luxury car market. The Volkswagen Phaeton was introduced in 2002 and it quickly failed, especially in the United States. » Subscribe to CNBC: https://cnb.cx/SubscribeCNBC » Subscribe to CNBC TV: https://cnb.cx/SubscribeCNBCtelevision » Subscribe to CNBC Classic: https://cnb.cx/SubscribeCNBCclassic About CNBC: From 'Wall Street' to 'Main Street' to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more. Connect with CNBC News Online Get the latest news: https://www.cnbc.com/ Follow CNBC on LinkedIn: https://cnb.cx/LinkedInCNBC Follow CNBC News on Facebook: https://cnb.cx/LikeCNBC Follow CNBC News on Twitter: https://cnb.cx/FollowCNBC Follow CNBC News on Instagram: https://cnb.cx/InstagramCNBC #CNBC #Volkswagen Why The Volkswagen Phaeton Failed In The United States
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Text Comments (972)
Carl Jones (1 day ago)
The fat creeps couldn't get in it
Tessou (7 days ago)
You found the one person in your staff that couldn't pronounce Phaeton to explain why the Phaeton didn't sell. Great job.
Stuart Yurczyk (13 days ago)
I think it's important to note that VW did this in retaliation to Mercedes for releasing the A-Class which was encroaching on VW's more affordable car market.
JQ Dan (17 days ago)
3:29 this is eerily like a perfect dooms day escape vehicle
Todd Robertson (20 days ago)
Same problem Hyundai Genesis had..people that buy luxury want that Benz or bmw as a status symbol
Markus Epple (21 days ago)
European sedans are not "full size" at all. Well, did You forget a hint on the 12-cylinder engine?
ElZamo92 (22 days ago)
The same reason why no one buys the Touareg: brand recognition. While the Touareg is a Porsche Cayenne with a VW badge, the Phateon was a Bentley Continental with a VW badge, and no one in the US buys them because they’re “too expensive” for a VW.
Rick McGrath (30 days ago)
Very Worst
dumb things you see (1 month ago)
not the first time a mnafacturer tried this--and not the last--kind of like the chevy cavalier with a cadillac name cimarron and sell it off as a cadillac
Christopher S-B (1 month ago)
I'm sure it was because of the styling. For VW, they made the fatal mistake of making the luxury car look just like the cheaper car, so no one even wanted to try it.
Skullface YT (1 month ago)
1:03 It's not a V12 it's a W12 because it was 2 V6s put together to make one crazy 12 cylinder
Marack Obama (1 month ago)
They asked an car expert Sam AbdelYouKnow...
weetikissa (1 month ago)
This video completely misses the point about the car: 1) It was a halo car, just like the Bugatti Veyron. Its entire point was to be unusual for the brand and change people's minds about what VW can offer. And it completely did away with the "Audis and Bentleys are just VWs" argument because now you could counter it with "Not really, but so what, because the Phaeton's as good as the S series." The car gave the brand the sports luxury cred it needed in order to make even more expensive versions of Audis, Lamborghinis, Bentleys etc. and then later go on to acquire Porsche. They tried to change their brand image, at least in Europe, and I'd say that it was totally successful. 2) Gerhard Schröder was a Social Democratic Chancellor of Germany at the time, and he couldn't be seen driving around in a Merc or a BMW, so he needed a top-shelf VW to rep in. Volkswagen and Schröder are both from the German state of Lower Saxony, and the state is a major stockholder in the company, so there's this connection.
S.I.Rafael98 (1 month ago)
This car is better then s klasse :) and now its between 4k and 10k euros (not the newest models) but people are idiots and chohe a freaking audi with fabrication problems -_-
S.I.Rafael98 (1 month ago)
Wtf they didnt made a v12 phaeton they did a w12 🤦‍♂️🤦‍♂️🤦‍♂️
MarloSoBalJr Gaming (1 month ago)
I've always wanted to own a VW Golf; for some reason, but German engineering being "too good" always feared me. When maintenance comes around my wallet is cringing
Urged Panda (1 month ago)
It looks like a Passat and I think that’s the problem
Colin Grubbs (1 month ago)
Many buyers probably bought the Audi A8 which is the same thing as the VW phaeton.
Awaken soul (1 month ago)
Skoda is better
John K Lindgren (1 month ago)
*I hava seen one Phaeton in Bangkok! REVOLVER, REVOLUTION and VOLVO it's all LATIN* https://youtu.be/cFS0IUTF2rE
garry miller (2 months ago)
2004 W12 i would love to find that is low miles well looked after no gremlins
David G (2 months ago)
A rich man's people's car brought to you by Mr. Regular!
Ohlukei (2 months ago)
Volkswagen stopped making "folks waggons" long ago. Volkswagen are too expensive to an "everyones car". If you really want a "folks waggon" buy a Suzuki.
Nathan Alder (2 months ago)
This video lacked detail
Stöpfel W. (2 months ago)
The sad destiny of the Phaeton one of the best cars ever 😢 but it’s not completely death luckily, VW has some plans for the future, EV plans sadly but plans 😄
Vision33r (2 months ago)
VW is basically a German Honda without the reliability. Americans buy VW because they can't afford a BMW or Merc. Those who can afford a BMW, do not care about VW.
doczooc (2 months ago)
The Phaeton did not fail. It was a very successful "Halo" car that moved the Volkswagen brand perception from being a competitor to GM, Ford and Toyota one class up, at least in Europe. Everybody talked about VW doing the Phaeton, Bugatti, Bentley and Lamborghini and how it does not fit the brand. Now it does. The world has even taken over Mr. Piech's word invention "premium brand" to describe those cars. (Before, Premium was a beer.)
Ansgar Alvares (2 months ago)
How about one on the Ford Edsel...??
Ted Malley (3 months ago)
The VW Phaeton was the poor man's Bentley.. same W12 engine , drive train , brakes and controls..all for 1/3rd the price.
Jibran Bachh (3 months ago)
well it is pronounced as Folks Wagon
Your Typical Average Asian Guy aka Savage Asian (3 months ago)
These cars were masterpieces. Too bad it didn't do well
AKASH MENGI (3 months ago)
5:15. The stats show that the audis and bmws are more common on the road compared to the phaeton. So phaeton is the less owned car.. Means its elite.. Perid
Richard Niemand (3 months ago)
Volkswagen is very affordable??? 😂
Ryan Riopel (3 months ago)
Every car with AC has a dehumidifier in the cabin to prevent the windows from fogging. It's called air conditioning. Ever noticed that if you have AC, it turns on when you put the air on defog? Bingo. Dehumidifier.
Steve Davis (3 months ago)
I just looked on ebay, they're all less than $8200
PCmasterRacist (3 months ago)
The US is a strange country. Buying more Lexus cars than BMW, Audi or Merc's
Bartonovich52 (3 months ago)
Not only does it say VW... but it’s hard to tell apart from a City Jetta from a distance. If you want to blend in but have performance and luxury this is the car to have... but most people want to flaunt it. That’s why so many credit posers buy tiny 3 Series and C Classes when they should have bought a Camry or an Accord.
Bernard Laus (3 months ago)
Best second hand car buy ever! For 10 grants you've got one. Bad news :taxes and fuel consumption
Bartonovich52 (3 months ago)
Maintenance. Further depreciation.
Jamieus Rowlando (3 months ago)
It think it failed largely due it's boring looks, it looks almost identical to the Passat.
Jos Hop (2 months ago)
Because people doesn’t want a stripped down cheaper Audi A8. VW should have focused to further improve the quality and reliability of the A8 instead of creating the Phaeton as a pseudo wannabe competitor of the Mercedes-Benz
Ruffas (3 months ago)
The phaeton looked ugly compared to its competitors. Thats one of the reasons it failed
Stefan Meinicke (4 months ago)
It failed here in Germany, too. And yet VW is still trying with the Arteon. I guess completely ruling every single car category in Germany just isn't enough, they have to go the "luxury" route... I'll just stick with my Golf, thank you.
semiretired86 (4 months ago)
Bugatti is italian not french and the Pheaton was a flop it failed in North America and in Europe
Krysta Tinyy (4 months ago)
I have a b5 Passat that I love dearly, she is a project car. I would love to get one of these. Super clean car, reminds me of a higher luxury Passat. I’m surprised it didn’t do better, probably because people definitely do pay for the brand I suppose 🤷🏽‍♀️
Terence Jay (4 months ago)
I'm in the UK, and having had a Passat and a Golf, a Phaeton is my next purchase. You can get some really nice examples for £7,500, if you go for the V6 3-litre diesel which gives around 35mpg. Higher mileage ones can be £3,500.
tare benjamin (4 months ago)
And now they spend more than tht in a Hyundai Genesis and a kia
MarkVL (4 months ago)
They should've known. Remember Opel Admiral and Diplomat, Fiat 130; great cars but wrong label. In VW's case they were competing against their own (VAG brand) Audi A8.
Mr. Céspedes (4 months ago)
Another endless money pit. I hear you Scotty!!!
Spencer Mclaughlan (4 months ago)
Umm it’s a W12 not a V12 but ok
The Stonegate Roadrunner (4 months ago)
The Phaeton was just a thrifty, restyled version of the Bentley Continental. VW needed to develop a mid size Bentley anyway, the Phaeton was a by product and hence didn't need to be "successful" by itself. However, it did extremely good in China and helped position the VW brand in China as a luxury brand. The U.S. market is not the benchmark for the taste of the world.
Herbert Norkus (4 months ago)
Its funny how when cnbc DOESENT cover phony political news slandering the president, they actually do a good job.
Sagan Murphy (4 months ago)
If they badge engineered it as an Audi it would have done better
Tomas Bickel (4 months ago)
I want one
Joseph Bettano (4 months ago)
Chevrolet basically tried something similar with the SS model. It was basically a luxury car sold under a working class' brand. The car had many great features. It also started out at $50k. Basically, people were not willing to drop $50k on a Chevrolet car. GM priced a Chevrolet, an inexpensive brand, at about the same as a base trim Cadillac, the luxury brand. Chevrolet, however, tried to market the car by using it as their Monster Energy NASCAR Cup Series car, but to no avail. The car just did not sell well, and it shows as I rarely ever see a Chevrolet SS on the roads ever! Basically a combination of poor marketing, pricing the car like a luxury car, and selling it under a brand known for inexpensive and affordable to the masses is why it never sold well!
Sebastian Nolte (4 months ago)
I knew that Lexus is successful in the USA, but I never knew it was THAT sucessful. Here in Germany Lexus has the same problem as VW (the Phaeton wasn't sucessful here either): In this class people buy because of the brand, no matter how good the car is. So only Mercedes, BMW and Audi has a chance (actually it was als Ferdinand Piech who brought Audi on a level of Mercedes and BMW in the 90s and it was a hard way). And actually also one class under this it is hard here in Germany: There used to be competitors to E-class, 5 series and A6, but they are more or less gone.
michael F.H (4 months ago)
The whole point of the Phaeton was that it formed the basis for the Bentley sedan,which shared many components like the floor-pan and power units and so it was planned to be a a cost effective top end VW variant ! This was not realised. It did fail very badly in the US with peak sales of only 1940 sold in 2004 (Probably dealer demos?) .. Peak sales in Europe were only 4500 units in 2005. It was not even sold in VWs major overseas market China!
cjc2010 (4 months ago)
Moral of the story? People are badge whores.
Skeeter Saurus (4 months ago)
Just another point to be made: car companies DO NOT UNDERSTAND AMERICAN AUTO MARKETS! Though retired from transportation design now, I could give ANY MANUFACTURER the keys to selling 4-6 million units a year in the U.S., and utterly DESTROY most other manufacturers simultaneously in several sub-categories of 'vehicle production'...the problem is, in year-2 of their efforts, every 'powers-that-be' in the world would use their vast wealth, power and influence to stop it through a combination of regulations, smear campaigns and propaganda...see, it's not about 'volkswagen' (the REAL PEOPLE'S CAR) anymore, or 'green', or even 'what the people want'...it is about elite profiteering combined with the few mega-corporations that run the world's limited product venues. I can prove all this to you with one simple question, too. When's the last time you have seen a COMPACT mini-pickup for sale in America with a STANDARD Cab and 6-ft bed? Don't blame it on the market, either...you have to look at EPA fleet-mileage rules and the 'wheelbase formula' for the REAL answer...see, it's about market control...not efficiency, affordability or customer desires...thus, it's a truly 'FIXED game' worthy of a RICO statue investigation...and the media just won't cover the facts!
Buggs (4 months ago)
Less than $12k? In the UK you can get decent ones for under $5k.
Buggs (4 months ago)
A dehumidifier in the cabin... Would that be A/C?
QUANTUM (4 months ago)
@CNBC why the hell you pronounce Volkswagen WolfsWagon and not "Folks-Va-Gen" ? Ignorant or arrogant ?
SuperMrBentley (4 months ago)
Well engineered LOL
De Cnijf Kris (4 months ago)
VW today's models cost about 5000 USD less in America compared to the same car in Europe. The Phaeton was very rare in my country.
Malre gtx (4 months ago)
Pheaton failed in Germany as well.
Ilias Noord (5 months ago)
Who knows what car that is on 0:15?
Brandon Taylor (5 months ago)
The same reason why the Touareg failed in the US.
NiteGambler (5 months ago)
Me i have been driving VW & Audi since 1980........my favorites Audi '86 coupe GT and my 04 Phaeton presently in the drivway with 140,00 km. v8.........even my wife loves this car
Hardocore (5 months ago)
the Phaeton failed everywhere
Richard Reavis (5 months ago)
Meh. I'll go with the Bentley on the used car lot behind my house. Or stick with my Civic.
giovanni cadoni (5 months ago)
It's pronounced FolksVagen, for Vuck's sake!
RockaBilly (5 months ago)
I'm glad it failed. You can't name a luxury car a "People's car". Nevertheless it was a great car but they should have released it as an audi
edduuuard (5 months ago)
Yeap, Mercedes and Lincoln, and italian cars are the most beautiful cars in the world. VW on the other side... not so much.
MrOkadaman28 (5 months ago)
It looks like an overfed Passat. That was one of its major problems - it looked bland.
Ambergris (5 months ago)
Well... How do you explain then the success of the Touareg? They just released the third generation, and it ain't cheap.
lce124 (5 months ago)
It failed everywhere didn't it?
mtlicq (5 months ago)
Bugatti Italiano, no french
mtlicq (4 months ago)
@Sebastian Nolte That explains why it had no brakes!
Sebastian Nolte (4 months ago)
No, it is French. Some history: - Ettore Bugatti was an Italian, who moved to France. He founded the famous company "Bugatti" in Molsheim (France) in 1909, so it was a French company. But that company existed until 1963. - In 1987 an Italian entrepreneur acquired the brand and founded the italian company "Bugatti Automobili S.p.A. " who build the EB110 in a factory in Campogalliano, Italy. It existed until 1998. - In 1998 Volkswagen acquired the Bugatti brand (and again: only the brand/logo/design, not the italian company) and founded a new company "Bugatti Automobiles S.A.S. " based in Molsheim, France. They did this for tradiational Reason. They could have also said "let's build a supercar called "Otto" and build it in Germany" but they used the Bugatti brand and founded the new company Bugatti in Molsheim, France. So the current company "Bugatti" (so that builds the Chiron) officially is a French company. In a way you can say that it is more a German company. But definitely not Italian. The Italian company that built the EB110 was only one episode in the history of the name "Bugatti".
1kRaFt (5 months ago)
I own a Phaeton: luxury, confort, power. Super great car (I own also a Mercedes C class 2016).
Big L (5 months ago)
no one wanted to pay 70-80k on a bigger version of the jetta/golf
wutzerface77 (5 months ago)
They got a lot of information wrong in this video, such as referring to it's W12 engine as a "V12" and VW didn't try to "elbow it's way into the luxury market" at all, this was Ferdinand's last hurrah with VW
mike sharkey (5 months ago)
I always thought it was a rebadged A8
Chatta299 (5 months ago)
It failed everywhere and for a good reason. It wasn’t a great car.
T P (5 months ago)
This is stupid if you have economy class brand how people supposed to buy 85000 usd car???
Mary Tieger (5 months ago)
I test drove the first Phaeton in the US in New York City. Flew out from San Diego met a stunt car driver and drove the hell out of it. So beautiful, it's an incredible car, *massaging seats. Hands off trunk opening, tricks with keys. I told the driver... "This won't sell in the US. The age group still equates VW with beach party"
Finesta (5 months ago)
1:58 holy orange peel.
Coco Jumbo (5 months ago)
Its about badge and perception. Is Vw Arteon failing? Looks better than bmws and audis
chad stern (5 months ago)
Not a v8 or a v12 ya bafoons two vr6s in a w configuration or the w8
Nathan Rolofson (5 months ago)
CNBC, do a video on the late 1950s failure, Ford Motor Company's Edsel.
Jason Wang (5 months ago)
it fails everywhere
左将军领徐州牧如东侯 (5 months ago)
It (辉腾)also failed in China, although most of VW’s other models dominate Chinese market many years.
Embargoman (5 months ago)
Hyundai did with the Genesis and they end up using it's own brand separate with Hyundai and now Genesis competes with Mercedes Benz and BMW, Volkswagen should stick with Audi as they know that the Pheaton is now sold as an Audi.
Pierre Pinson (5 months ago)
The German and the Japenese cars are the BEST in the WORLD!
BigTymin (5 months ago)
it failed around the world not just the US
MrMagooo (5 months ago)
Going to check cargurus for a low mileage phatoen. Thanks CNBC.
762ndTB (5 months ago)
I greatly miss Dr. Piech
m aX (5 months ago)
Why would you spend that much on a VW, just get a Audi. Even if it were a great car, exterior looks cheap like a Passat
SevenDeMagnus (5 months ago)
So sad. True, they forgot the psychology of people. If it's expensive, then you'd just buy the one that's related to quality luxury like Porsche. The heart of man is sadly more powerful than the mind and the logic but actually it's not logical too- just can't make the cake and eat it too.
MoP (5 months ago)
I want one
Tim Liao (5 months ago)
Maybe the name was kind of dumb too
Robson Rover Repair (5 months ago)
Because it wasn't an A8. That simple. Lol.
skulz1974 (5 months ago)
Because it was a Volkswagen garbage bin. Unreliable , period.
mtlicq (5 months ago)