Photo Credit: VW

I can sum up my ownership experience of a 2004 Launch Edition Volkswagen Phaeton W12 exactly the way my friends describe their boats: my two best days were the day I bought it and the day I sold it. That said, the experience was bittersweet, mostly because I had a pretty good handle on the backstory of the car.

Volkswagen’s 2005 Phaeton brochure

In 2003, a VW client talked to me about the coming Phaeton, gave me a bunch of background material on it and commissioned me, along with a few of other marketing services vendors, to submit ideas for programs that would promote the car.

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The background on the car was stunning, as the design, materials and factory were first rate and had a lot of money thrown at them by VW. The initial plan to launch involved all kinds of PR, product placement and potential fanfare. And, all the people I knew of were enthusiastic and seasoned people who brought all kinds of experience launching and marketing cars. Too bad very little of that was actually applied, or even around, when the car actually went on sale.

The briefing material on the car was unreal at the time. Ferdinand Piech, legendary Chief of the VW Group, difficult boss and masochist (note that VW engineers felt bullied enough by Piech and underlings to create diesel emissions defeat devices) personally created the parameters for the Phaeton, spending $1.3BB to develop the car alongside the Bentley Continental GT and Flying Spur.

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The car had the same all-wheel drive system, 18-way heated and cooled seats, climate system, unique dehumidifier, seat massagers and air suspension. The car had a choice of a V8 shared with the A8 (but in a higher output application here of 335 hp) or the W12 (415hp) used in the Bentley, minus the turbochargers.

Volkswagen’s 2005 Phaeton brochure

Piech had 10 specifications that the car had to meet, which caused a number of engineers on the team to quit. They included the ability to drive all day long at 186 mph in 120 degree F weather while maintaining a cabin temperature of 71.6 degrees F. Further, the Phaeton had to be able to hit 190 mph without a single vibration. Top Gear actually drove one to 201 mph.

Volkswagen’s 2005 Phaeton brochure

The whole thing was assembled in a purpose-built, all-glass factory in Dresden, Germany by a bunch of guys in white lab coats pushing around wheeled platforms with various pieces of the car on them across polished hardwood floors. I can sum the car up by showing you a picture of the trunk hinge.

Volkswagen’s 2010 Phaeton brochure

Yes, that’s the friggin’ trunk hinge, not a piece of sculpture. Those hinges were made by Campagnolo, the bicycle company. They commissioned an Italian bike company as a vendor to make just the hinges! I had not seen anything like this before and have not seen anything like it since.

In the W12, it includes an auto power opening and closing system for that trunk. Today, Phaeton owner forums note that this system sometimes refuses to open for you as an individual. The hinge deems you not important enough, and prefers you bring a date in the form of a tech from your local VW dealer.

The Launch

At the time of its launch, Car and Driver, Motor Trend and Autoweek heaped accolades on the Phaeton—with the exception of the archaic, last generation GPS system. It was strangely out of place given the A8 of the time was using a DVD system with next generation graphics. If the Allies that bombed Dresden back to the Stone Age during World War II were using the Phaeton GPS, they never would have found it.

Volkswagen’s 2005 Phaeton brochure

VW had big plans for the Phaeton and Touareg in Europe and the United States. In Europe, there was a red carpet treatment for this car—the dealer would pick it up for service and drop it back to you. If you were going to an airport, the dealer would work on your car while you were traveling and have it waiting for you at the airport when you got back. Awesome. You never had to go to the dealer. In this country, all that was discussed but deemed too expensive. Plus, when you have just spent $86,000 to $115,000 for a 12-cylinder Phaeton, it’s quite cathartic to stand on line at the VW Service counter chatting with the 20-year-old stoner kid holding a skateboard with a Phish logo on it.

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I brought up to a client that VW could promote that experience as a way to provide Phaeton owners with a chance to learn how to connect with their estranged children. He told me it was probably good I was not on staff at VW.

Since they had not wanted to start a separate division like Lexus to Toyota, they felt it appropriate to have the dealers create a dedicated “box” attached to the dealership. It would initially hold a W12 Launch Edition (black/cream) Phaeton and loaded V8 or a Touareg V10 TDU. Those two vehicles were emblematic of VW going upscale to the point of crossing over into Audi territory. There would be dedicated sales people trained to sell them. For marketing, there were all kinds of product placement programs. As an example, real estate people in key areas like Beverly Hills were to get a fleet of them to drive well-heeled folks around.

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In the end, pretty much all of what was planned... never happened. The only exception was some much-needed training for the sales people and a quick limited ride-and-drive promotion with a big hotel chain. No dedicated and enduring ad campaign ran. People who were on the original team made sure to get themselves removed from the inevitable clusterfuck. VW simply put a Touareg and Launch Edition Phaeton on an unmodified showroom floor. The dealers were not to sell those Phaetons so they remained as a demonstrator. No fewer than 300 identical cars were produced. The car was locked, and in some case roped off, so you had to ask someone for a key and that “started a conversation.” VW produced a free-standing glass screen to give you a sense that these cars had their own area. And, where did all that savings go? It went toward incentives to move the product.

You see, the 10,000-foot view of this car was great until you really drilled down as to where it slotted in people’s minds. That is, nowhere. It was an answer to a question that nobody asked. At the time, in this class, you had the BMW 7 Series, the Mercedes S-Class and the Audi A8.

I did not forget about Lexus and Infiniti, but they were not going to register as competition. Acura, Lincoln and Cadillac buyers cross shopping? Nah. It was simple; if you were badge conscious, you bought a BMW or Mercedes. If you were not as badge conscious, you bought an A8. And sales figures showed that you bought your A8 in June when Audi put $10,000 in incentives on the cars just as the new ones were put on boats from Germany. So, who were the projected 10,000-per year Phaeton buyers projected by VW, when Audi was struggling to move 7,500 A8s, and you had to generally walk by an A8 in the Audi VW combined store parking lots?

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It turned out, that person was a probably an Audi A6 4.2 buyer. That car was $65,000 loaded with a sport package and could be had for about $60,000 or less. A base V8 Phaeton was between $65,000 and $70,000 and went out the door for $55,000.

Launch Edition W12s stickered at $86,000 with all future W12s coming in at $105,000 to $115,000 with a special order.

Volkswagen’s 2005 Phaeton brochure

The results were predictable. VW struggled to move 1,500 cars the first year and the equivalent over the next two years combined. In that first year, less than a third were W12s including those 300 Launch edition showroom cars. By comparison, VW was moving hundreds of thousands of its other cars here. Bear in mind how out of place the pricing of this car was cast against other cars in the lineup. The next-most expensive car down was a W8-package Passat for a $20,000+ difference in sticker, with the spread pushing closer to $30,000.

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At least Hyundai had some higher-priced Genesis sedans when it introduced the $65,000 Equus, which still needed $10,000 on the hood to get it to sell.

VW in Germany pulled the Phaeton after three models years here in America and continued on for a few years in Europe with it, updating it once.

Love At First Sight

This brings us to my experience. In summer 2008, the economy was melting down, gas was pushing $4.10 a gallon in NJ and I was in Chicago for a meeting. I drove by a Hyundai dealership and right in front was a W12 Launch Edition Phaeton. Like someone buying a puppy at a store, I stopped in to “just look.”

It had about 20,000 miles on it and they wanted $35,000 for it. Next door was a sister store that was a Bentley dealership. The Phaeton had been traded in and they felt it was better placed at the Hyundai store, so here it was. It was spotless and I somehow decided I needed to fill some void in my life.

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Nevertheless, I offered $25,000 and noted that was conditional on including a factory VW Certified Pre-Owned extended warranty. The dealer had a sister VW store elsewhere so they could make that happen. They agreed and I cancelled my return flight to drive the Phaeton back. I did not have my EZ-Pass with me and the car had temporary tags so I blew through every toll on the way home mumbling that I was “sticking it to the man.”

Volkswagen’s 2005 Phaeton brochure

I had a pretty good year with the car and put about 10K miles on it. During that entire year, I never used the warranty and just changed fluids. The past owner had performed all kinds of service based on age not mileage. I had the records and a few parts here and there had been replaced. Nothing horrid but I assumed something was coming because it was just too good to be true.

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All 300 of the Launch Edition cars arrived with a defective sunroof motor that was replaced during prep at the docks. This struck me as a poor omen. Aside from the big badges and archaic GPS, I was struck by the complexity of the car. Anything you could imagine was in there.

Volkswagen’s 2005 Phaeton brochure

Somehow it was typified by the wood in the interior. It was real chestnut wood. Just gorgeous and very Bentley-esque. In fact, VW felt it so important to look at this wood uninterrupted that they obscured the A/C vents with it. No worries, when you needed those vents, the wood pieces retracted into the dash, as three separate pieces (left, right and center) via three separate motors running three little arms pulling the panel back into the dash. Over the course of the year, I came to believe that the whizzing sound that I may have heard when I got the CPO warranty was the bullet I dodged. That was prophetic.

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The car was rock solid and drove as such. No aluminum space frame here. This was all steel and weighed about the same as a Suburban. The car gathered power like a freight train. I really missed all that when it was in the shop for three months.

Volkswagen’s 2005 Phaeton brochure

You see, late in that year, I began to notice “issues” that needed to be tended to. I figured I would wait to collect a few of them, and I did. At the end of the year, the heated steering wheel was only getting warm in various patches, not all over evenly. The massaging feature in all four seats was barely moving in the driver’s seat. The left vent cover had retracted halfway and the motor died. It appeared to be falling asleep. The driver’s side window motor was slowing down. Worse, the gearshift lever was quite stiff in getting out of reverse or drive.

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I brought it to my local dealership as each VW dealership was required to have at least one Phaeton trained tech. In a worst case, the car would be worked on at an Audi or Bentley store. I talked to the general manager and left the car. The parts were ordered and had to come from Germany, because stocking them in the U.S. would be too convenient. That took three weeks. I got a call from the general manager saying I would laugh seeing what he was seeing. I went over but my amusement turned to a growing sense of fear that VW was just not supporting service on the Phaeton at a level I might have liked. Oddly, my fear would not be as bad as the reality.

The general manager presented me with a brown cardboard box containing a new heated steering wheel (minus the airbag) he had ordered. He told me to “open it.” “Fucking unreal, right?” he said. The steering wheel I had in my car was a chocolate, almost black, leather. Pretty conservative overall. The replacement I was staring at in the box was bright lime green. I could not figure out whether this thing has been dyed this color intentionally or had some sort of horrible chemical reaction. Either way, it did not instill me with confidence. So, the dealer reordered the wheel from Germany and otherwise started the work.

At the end of month two, everything was done, with the exception of the stiff transmission shift issue. The problem was identified as being an interlock issue connected with one of five ECUs. All five had to “agree” with each other in order for the car to start and operate correctly. The dealer had replaced one and the problem persisted. At the end of month three, all five ECUs had been replaced.

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The general manager called me and asked me to stop in for an update. He stood with the Phaeton tech and said exactly what you never want to hear from the dealer fixing your hundred-thousand-dollar, twelve-cylinder car; “We have tried everything and the car will not start. We just do not know what to do from here.”

Volkswagen’s 2005 Phaeton brochure

He noted they had a couple of calls into the regional tech office of VW and but they were booked up with other issues. I went home and called my past client contact at VW and explained the situation. I said “I have never asked for anything but I would appreciate it if you would fly a tech here from Auburn Hills MI and reflash my ECUs.” The guy was out the next day and I had the car back two days later.

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The dealer showed me they had done $7,500 worth of warranty work. I listed the car on two sales sites that day as it was perfect and ready for its next owner. I listed it for $12,000 more than I paid for it noting it had just finished a service and that it needed nothing. I must have gotten a dozen serious emails and one guy came out with cash the next day.

I reiterated my ownership experience and he could not believe his luck in finding a low mileage car, with a warranty and all up to date service. He noted “all these cars have something going on.” I took the cash and simply agreed with him.

I may have shed a tear. I know I had a glass of bourbon and toasted the overall experience.

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Eric Friedman owned an ad agency that was a vendor to VW of America, and their ad agency, between 1991 to 2001. He also has a weakness for cars with a complex back story.