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Audi of America CEO Fired for Criticism of Poor Selling VW Phaeton

Was Mees the Only VW AG CEO Talking Sense?

There are obvious mistakes made in the automotive business, yet it seems that those high in the ivory towers of automaker boardrooms rarely admit to making any. And woe be unto those executives who make the horrific mistake of actually admitting that errors of judgment could have been made.

Outside of Volkswagen, and Im sure within its ranks too, there wasnt a car executive, automotive journalist or auto enthusiast in the world that didnt question why the economy brand was entering into the rarified $100K luxury sedan market when it initially announced its V8- and W12-powered Phaeton (see automotive news archive for Nov 7, 2003: VW Bullish on North American Phaeton Sales). After all, the German automaker already owned as many luxury brands as it

When VW initially announced its V8- and W12-powered Phaeton there were few automotive analysts that didnt ask why? (Photo: Shawn Pisio, American Auto Press)
did economy, including Audi, Bentley, Lamborghini and Bugatti, the former of which would be cannibalized if the Phaeton saw the light of day.

But what goes around seems to come around in the VW family, as the Volkswagen brand was already being parasitically eaten away by VW-owned European nameplates Skoda and Seat, both offering badge-engineered versions of less expensive Volkswagen cars with the same or more features for less money.

Most analysts

The Phaeton has been a high-level failure from a sales and publicity standpoint. (Photo: Shawn Pisio, American Auto Press)
shake their heads in disbelief of what parent company Volkswagen AG, was, and still is attempting to accomplish, that is if they can make any sense of it. The Phaeton has been a high-level failure from a sales and publicity standpoint, and despite this the brand is still considering building a midsize BMW 5-Series fighter codenamed C1 (see automotive news archives for Aug 29, 2004: Industry Report: Turmoil in Wolfsburg as Volkswagens C1 Midsize Luxury Car Delayed). Once again, most auto analysts are expecting the midsize VW luxury model to merely eat into Audi A6 sales, leaving BMW alone to achieve one record breaking
Axel Mees, was axed from his job as head of Audi of America Inc. yesterday for voicing his opinions about the poor selling Phaeton. (Photo: Audi of America)
sales success after another.

One executive that couldnt keep towing the company line while seeing his profits sabotaged from within was Axel Mees, axed from is job as head of Audi of America Inc. yesterday. Stating that expanding the Volkswagen brand into the luxury segment may have been a mistake, Mees made the mistake of voicing what many other VW executives are most likely thinking.

If Volkswagen wasnt currently suffering from debilitating sales in North America and abroad (see automotive news archive for Feb 19, 2004: Volkswagens Fifth-Generation Golf is Underperforming in Europe), plus troubling reliability problems that have plunged

Under ex-CEO Ferdinand Pi?ch, quality took a back seat to grand plans of pushing the Volkswagen brand upmarket. (Photo: Shawn Pisio, American Auto Press)
the brand that was once the poster child of automotive dependability down to 32nd out of 37 nameplates in J. D. Powers and Associates 2004 Vehicle Dependability Study (VDS), and second to last place in the 2004 Initial Quality Study (IQS), then a simple indulgence such as the Phaeton would hardly be a big deal. But ex-CEO Ferdinand Piëch, while initially turning the company around in the early 90s, allowed quality to take a back seat while grand plans for pushing the Volkswagen brand upmarket were set, and arguably the money that could have been used to improve the reliability of VW and Audi vehicles was spent in developing a vehicle that would never do more than fill a small niche market.

What happened to Piëchs pet project when it hit the real world is now a lesson in history

Axel Mees said, "I think Volkswagen underestimated the weakness of their brand in the luxury segment." (Photo: Shawn Pisio, American Auto Press)
unfolding in modern day. To call the Phaeton a disappointment would be an understatement, with sales this year in the U.S. totaling a meager 1,433 units from January through October. No wonder those affected within VW are disgruntled. Octobers sales of 305 units, if amortized to the end of year would mean a total of 2,000 Phaetons may be all that is attainable, much lower than VW had initially intended.

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