The Volkswagen Phaeton came to be back in the early 2000s when the chairman at the time – Ferdinand Piech – decided to challenge VW engineers to come up with a vehicle that could compete with the Mercedes-Benz S-class, and cruise at 300 kph (186 mph) comfortably. The result was the 2002 Volkswagen Phaeton that was built with handpicked materials and white gloves – coming with a sticker price of 89,650 Euro ($101,000.) The Phaeton didn’t perform well in the U.S., which eventually led Wolfgang Bernard to pull the Phaeton from the market in 2006, which turned out to be one of the things that ended his career with Volkswagen. The Phaeton continued in other markets, but sales were still unacceptably low.

This year Volkswagen was supposed to reveal the new Phaeton, which – back in 2012 – was said to be the car that would influence all Volkswagen models going forward. More recent news has come to light, however, and plans have changed drastically. Unnamed sources close to the Phaeton project now claim that Volkswagen has decided to hold off on the Phaetons design, despite the fact that the new design is ready for production. The move to completely revamp the Phaeton, and delay the release of the current design, came from the desire to increase profits from the slow-selling luxury sedan. As of the time of this writing, there is no word of when the next design of the Phaeton will debut or be ready for production.

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Why it matters

It’s no surprise the VW is rethinking the whole project. To be honest, now that Piech is out of the VW’s upper circle, I’m shocked it hasn’t dropped the model altogether. Last year VW only sold 4,000 examples of the Phaeton, and in the first half off this year, VW’s profit margin fell short by 2.3 percent compared to Peugeot and Citroen. VW has already dropped the Eos convertible due to poor demand, so I’m sure dropping the Phaeton altogether isn’t necessarily out of the question. The bottom line is that the Phaeton is competing in the luxury market, and to make a profit at that level, you need more than 4,000 sales a year. What do you think? Should Volkswagen drop the Phaeton and focus efforts on the rest of its lineup? Let us know in the comments section.

2011 Volkswagen Phaeton

2011 Volkswagen Phaeton Exterior
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Read our full review here.

Source: Bloomberg

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