from http://www.autoextremist.com/
Dr. Piech Blows VW Up Real Good.
Detroit. This is the year when four formerly smart German car companies will, in the immortal words of John Candy on SCTV, "Blow up real good!" Today, we'll talk about VW. We'll get to BMW, Porsche and Mercedes-Benz in future issues. Convinced that their buyers "need somewhere to go," after they grow out of VW's new urban/affordable chic image, VW is prepared to unleash the tragically-named "Phaeton" on the world - a $50,000 luxury sedan that will allegedly compete against BMW, Mercedes-Benz and, lo and behold, its own Audi division. This is about as clear an indication as anyone would need that Dr. Ferdinand Piech, the legend-in-his-own-mind (just ask him), engineer extraordinaire and VW Chairman, has completely gone off the deep end. Not only is he taking VW down a road less traveled, he's taking them down a road that isn't even a gleam in the highway planner's eyes yet.
VW planners are absolutely convinced that the Phaeton is what they need. Let me rephrase that. VW planners are absolutely convinced that the Phaeton is what Dr. Piech wants them to say they need, because basically, that's how it works over there. Of course, this completely flies in the face of the reality of the VW brand and what it stands for in the U.S. - not to mention threatening to destroy everything Audi has accomplished in the last decade.
And while we're on the subject of Audi, left for dead after a hatchet job by "60 Minutes" years ago, Audi has made the long, slow climb back - and yet they still have a long way to go. Plagued by pitiful resale and optimistically high price points, Audi is struggling to establish itself as the smart alternative to BMW and Mercedes. They would be the first to admit that they aren't there yet. For years, they courted VW customers who were looking for the next step "up" to come to their dealers and continue their automotive journey through life with Audi, and, to some extent, that worked. And now here comes Piech, marching in with his grand plan for VW, threatening to pull the rug out from Audi in one fell swoop.
Audi executives want to see Piech retire, not to the VW Supervisory Board - but to Mars. Audi North America officials are keeping their mouth shuts, but behind the scenes, they're seething.
In fairness, one high-up auto executive who should know pointed out to me not too long ago that VW is perceived quite differently in Germany, saying that people there will be much more accepting of the brand as it moves upscale. Which is all well and good, except this isn't Germany. Remember, this is the country that the Germans took over when it came to the luxury-performance high-end class. Hell, they even created the genre. But since then, they have been inundated by shockingly good entries from the Japanese that are encroaching on their turf. And now they find themselves in a fight for their lives with the Japanese, while continuing to beat on each other.
How VW is perceived in Germany is not the issue, it's how VW is perceived over here that's the heart of the matter.
Piech is blissfully choosing to ignore two basic things about VW in the American market: 1. The VW image, though it has finally transitioned from counter-culture hip to urban cool, is still one of semi-affordability. Not cheap, by any means, but somewhat affordable nonetheless. It's German, but it's one step below the BMW/M-B/Audi precipice, and it's comfortable operating there. 2. Taking the VW brand upscale by dinking out $37,000 W8 Passats is one thing. That's really pushing the envelope, and they might actually find a few former Audi buyers out there who will want them. Skipping up to the $50, 000 price category, however, where the competition is so brutal and the air is so different, is, as Dr. Bud would say, "A whole 'nother country."
This VW strategy revolves around one giant assumption: They're asking and expecting generations of Americans to forget what the "VW" symbol has basically represented to them since Day One in this country - which is affordability - true, not as affordable as it once was, but still affordable in the overall scheme of things. And they're asking consumers to take a leap of faith and believe that this new car is not only the equal of entries from Mercedes-Benz, BMW and Audi - but that VW truly belongs in this class of automobile, that it is worthy to be considered with brands that have been seared into the American brains for years as performance/luxury icons.
That's going to be a real tough sell, folks.
It doesn't help that VW dealers are up in arms over the totally nonsensical name (for the record it means "open carriage" -ed.). They're well aware that in this market there's a narrow window of opportunity to launch a new brand right, and they don't want to go into it with a car that already has two strikes against it by the time it hits the showroom floor. Having customers stumbling over the name is the last thing they need. Little did the VW dealers know that the old code name "D1" would sound unbelievably good at this point.
You can bet on this: If this car is launched in the U.S. with that name, it will be the final testament to Piech's unbridled arrogance. Because it means that in spite of everyone telling him otherwise, he went ahead and did it anyway.
But besides befuddled VW dealers, you have to feel a little sorry for Audi dealers in this whole mess. In this, the most competitive market in the world, where they're fighting their German, American and Japanese competitors tooth and nail in order to eke out the least little bit of an advantage - here comes the head of the VW conglomerate telling them, "It's been nice boys and girls, but this is what we're focusing on from here on out." There are long-time Audi dealers who have invested millions of dollars fighting to make this franchise go in this country and who are beyond furious right about now - it's like a slap in the face after years of grueling work on Piech's behalf. Add to this equation the Audi enthusiasts who feel that Piech is abandoning them in the marketplace, and this story is not likely to have a very happy ending.
VW planners insist that the differentiator between VW and Audi is that VW will be more traditional, while Audi will be more sporting. Sounds remarkably like old-school Detroit car company planners trying to deal with the "too many models, too many divisions" conundrum to us. And they also insist that the Phaeton will make more sense down the road, when VW owners will be ready for the "next level." What - former VW customers are going go away for a while and then come back in five or so years and ignore everything else out there to buy a $50,000 car with a VW emblem on the steering wheel? As Dr. Evil would say, "Right."
You can rationalize anything if you spend enough time at it, I guess. But it smacks of one thing that we absolutely hate in this business - automobile companies trying to be all things to all people - which is a foolish pursuit and a first-class ticket to mediocrity. It encourages car companies to play in arenas they have no business playing in, and basically, it's nothing but flat-out greed.
Don't get me wrong, because profit is a wonderful and beautiful thing. But what Piech is attempting is nothing but arrogance wrapped in greed. He thinks he knows what's best for his company, his dealers and his customers - and that his sheer brilliance will open new vaults of profitability the likes of which VW has never seen.
We've written about the brilliantly maniacal Dr. Piech before in this column, even likening him to the lovable "Colonel Klink" from Hogan's Heroes fame, but there's nothing lovable about what's going on right now in the maelstrom that has become the VW-Audi marketing fiasco.
One man's arrogance and market whimsy are threatening to "blow it up real good" for VW in North America and take Audi out with it.
This is one "achievement" that the "Colonel" may live to regret.
Dr. Piech Blows VW Up Real Good.
Detroit. This is the year when four formerly smart German car companies will, in the immortal words of John Candy on SCTV, "Blow up real good!" Today, we'll talk about VW. We'll get to BMW, Porsche and Mercedes-Benz in future issues. Convinced that their buyers "need somewhere to go," after they grow out of VW's new urban/affordable chic image, VW is prepared to unleash the tragically-named "Phaeton" on the world - a $50,000 luxury sedan that will allegedly compete against BMW, Mercedes-Benz and, lo and behold, its own Audi division. This is about as clear an indication as anyone would need that Dr. Ferdinand Piech, the legend-in-his-own-mind (just ask him), engineer extraordinaire and VW Chairman, has completely gone off the deep end. Not only is he taking VW down a road less traveled, he's taking them down a road that isn't even a gleam in the highway planner's eyes yet.
VW planners are absolutely convinced that the Phaeton is what they need. Let me rephrase that. VW planners are absolutely convinced that the Phaeton is what Dr. Piech wants them to say they need, because basically, that's how it works over there. Of course, this completely flies in the face of the reality of the VW brand and what it stands for in the U.S. - not to mention threatening to destroy everything Audi has accomplished in the last decade.
And while we're on the subject of Audi, left for dead after a hatchet job by "60 Minutes" years ago, Audi has made the long, slow climb back - and yet they still have a long way to go. Plagued by pitiful resale and optimistically high price points, Audi is struggling to establish itself as the smart alternative to BMW and Mercedes. They would be the first to admit that they aren't there yet. For years, they courted VW customers who were looking for the next step "up" to come to their dealers and continue their automotive journey through life with Audi, and, to some extent, that worked. And now here comes Piech, marching in with his grand plan for VW, threatening to pull the rug out from Audi in one fell swoop.
Audi executives want to see Piech retire, not to the VW Supervisory Board - but to Mars. Audi North America officials are keeping their mouth shuts, but behind the scenes, they're seething.
In fairness, one high-up auto executive who should know pointed out to me not too long ago that VW is perceived quite differently in Germany, saying that people there will be much more accepting of the brand as it moves upscale. Which is all well and good, except this isn't Germany. Remember, this is the country that the Germans took over when it came to the luxury-performance high-end class. Hell, they even created the genre. But since then, they have been inundated by shockingly good entries from the Japanese that are encroaching on their turf. And now they find themselves in a fight for their lives with the Japanese, while continuing to beat on each other.
How VW is perceived in Germany is not the issue, it's how VW is perceived over here that's the heart of the matter.
Piech is blissfully choosing to ignore two basic things about VW in the American market: 1. The VW image, though it has finally transitioned from counter-culture hip to urban cool, is still one of semi-affordability. Not cheap, by any means, but somewhat affordable nonetheless. It's German, but it's one step below the BMW/M-B/Audi precipice, and it's comfortable operating there. 2. Taking the VW brand upscale by dinking out $37,000 W8 Passats is one thing. That's really pushing the envelope, and they might actually find a few former Audi buyers out there who will want them. Skipping up to the $50, 000 price category, however, where the competition is so brutal and the air is so different, is, as Dr. Bud would say, "A whole 'nother country."
This VW strategy revolves around one giant assumption: They're asking and expecting generations of Americans to forget what the "VW" symbol has basically represented to them since Day One in this country - which is affordability - true, not as affordable as it once was, but still affordable in the overall scheme of things. And they're asking consumers to take a leap of faith and believe that this new car is not only the equal of entries from Mercedes-Benz, BMW and Audi - but that VW truly belongs in this class of automobile, that it is worthy to be considered with brands that have been seared into the American brains for years as performance/luxury icons.
That's going to be a real tough sell, folks.
It doesn't help that VW dealers are up in arms over the totally nonsensical name (for the record it means "open carriage" -ed.). They're well aware that in this market there's a narrow window of opportunity to launch a new brand right, and they don't want to go into it with a car that already has two strikes against it by the time it hits the showroom floor. Having customers stumbling over the name is the last thing they need. Little did the VW dealers know that the old code name "D1" would sound unbelievably good at this point.
You can bet on this: If this car is launched in the U.S. with that name, it will be the final testament to Piech's unbridled arrogance. Because it means that in spite of everyone telling him otherwise, he went ahead and did it anyway.
But besides befuddled VW dealers, you have to feel a little sorry for Audi dealers in this whole mess. In this, the most competitive market in the world, where they're fighting their German, American and Japanese competitors tooth and nail in order to eke out the least little bit of an advantage - here comes the head of the VW conglomerate telling them, "It's been nice boys and girls, but this is what we're focusing on from here on out." There are long-time Audi dealers who have invested millions of dollars fighting to make this franchise go in this country and who are beyond furious right about now - it's like a slap in the face after years of grueling work on Piech's behalf. Add to this equation the Audi enthusiasts who feel that Piech is abandoning them in the marketplace, and this story is not likely to have a very happy ending.
VW planners insist that the differentiator between VW and Audi is that VW will be more traditional, while Audi will be more sporting. Sounds remarkably like old-school Detroit car company planners trying to deal with the "too many models, too many divisions" conundrum to us. And they also insist that the Phaeton will make more sense down the road, when VW owners will be ready for the "next level." What - former VW customers are going go away for a while and then come back in five or so years and ignore everything else out there to buy a $50,000 car with a VW emblem on the steering wheel? As Dr. Evil would say, "Right."
You can rationalize anything if you spend enough time at it, I guess. But it smacks of one thing that we absolutely hate in this business - automobile companies trying to be all things to all people - which is a foolish pursuit and a first-class ticket to mediocrity. It encourages car companies to play in arenas they have no business playing in, and basically, it's nothing but flat-out greed.
Don't get me wrong, because profit is a wonderful and beautiful thing. But what Piech is attempting is nothing but arrogance wrapped in greed. He thinks he knows what's best for his company, his dealers and his customers - and that his sheer brilliance will open new vaults of profitability the likes of which VW has never seen.
We've written about the brilliantly maniacal Dr. Piech before in this column, even likening him to the lovable "Colonel Klink" from Hogan's Heroes fame, but there's nothing lovable about what's going on right now in the maelstrom that has become the VW-Audi marketing fiasco.
One man's arrogance and market whimsy are threatening to "blow it up real good" for VW in North America and take Audi out with it.
This is one "achievement" that the "Colonel" may live to regret.
But then again, I'm biased since I've never liked VWs anyways.. thought they were way overpriced for what they offer. 
