2004 Volkswagen Phaeton V8Enlarge Photo
Although a facelifted version of the current Phaeton will be released in Europe and China, the next-generation Phaeton is still at least two years away, likely more, from U.S. introduction.
Ringing in at around the same price as a base Mercedes-Benz S-Class, BMW 7-Series, Audi A8, or Lexus LS, the 2004-2006 Volkswagen Phaeton never seemed to convince U.S. luxury shoppers that it was worth the coin.
Over several drives of the $70k Phaeton back when it first came out, The Car Connection was impressed with the big sedan's solidity and construction, as well as the impeccable interior and cabin detailing, and it was one of the first models among VW and Audi products to feature 'scroll roll' steering-wheel toggles. Interior and trunk space were cavernous, and powertrain perfromance was brisk and smooth, with an quiet, isolated feel that was every bit like that of its rivals.
Volkswagen had moved aggressively to update its showrooms and sales facilities, but buyers ended up needing more than the brand could provide on the service side. Some early quality and reliability issues plagued the Phaeton—including electrical issues that were so frequent that many in the media had to stop and take note. Automobile Magazine, frustrated with repeated dealership visits and unprepared service departments, called the electrical system in its long-term test Phaeton “irreparable.” And in a single test vehicle, this author at the time observed power window issues, as well as the infotainment system reboot itself after going over a major bump, during which many vehicle functions weren't available.
Just as the first time the Phaeton arrived ashore, VW's dealership network leaves something to be desired, according to customers. VW has ranked rather low in J.D. Power Customer Service Index (CSI) studies in prior years. But it's recently shown improvement; Volkswagen did better in this year's CSI, placing just above the mass-market average on the study. However compared to luxury brands, Volkswagen still placed behind all but Volvo.
VW pulled the Phaeton from the U.S. market in 2006, after continued slow sales. Volkswagen had been hoping to sell 20,000 worldwide per year but only sold around 4,500 Phaetons in its last year; U.S. sales were supposed to be a major portion of the total, but over 2004 and 2005 VW sold less than 2,500 of them.
While the Phaeton, as a model in itself, was a failure in the U.S. market, it helped spawn other vehicles from other brands that are in VW's stable—including the Bentley Continental GT and Continental Flying Spur.