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Volkswagen’s Phideon Competes Against Audi In China Market

Volkswagen is making a second run at a flagship model, at least in China, with its Phideon. The Phideon will official debut in Shanghai on Friday. Journalists were given a sneak peek Wednesday.
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In an unusual move, Volkswagen plans a new China-only model that competes directly with its subsidiary, Audi. According to Automotive News Europe, VW will unveil the Phideon Friday. The Phideon is the automaker’s answer to Chinese buyers who are seeking luxury without flash.

Flashy, luxurious cars are marks of conspicuous consumption to Chinese President Xi Jinping. The government has been conducting a war on overconsumption for the last four years. The moves have made Chinese consumers wary about displaying any signs of wealth.

Chinese In Luxury Crackdown

Even as the country has conducted its crackdown, there is still a vast market for vehicles that offer a little more and VW hopes the Phideon will fit nicely in this niche that, for want of a better term, can be called near-luxury.

The hook that VW hopes it has with the Phideon is that it is looked upon as a mass-market maker, unlike Mercedes-Benz or BMW which carry a luxury marque image. VW, says the trade paper, hopes Phideon will drive sales in the world’s leading the auto market.

“Shiny, blingy, showing-off is no longer the behavior in the (larger) cities,” Holger Santel, vice president of sales for SAIC Volkswagen, said Wednesday. The automaker gave the press a peek at the Phideon, lining it up against Audi’s A6, BMW’s 5 Series and Mercedes’ E-Class at a media event in Shanghai. VW’s partner in China is SAIC, the seventh largest domestic automaker.

From the display lineup, the marque that VW believes will be Phideon’s primary competition will be Audi. At the event, Santel told reporters that Chinese customers are saying they don’t want the more traditional luxury brands – Audi, Mercedes-Benz and BMW – because they “don’t want to show off.”

A spokesman for Audi said that the automaker believes that “our models are positioned in their own market segments.” Normally, Audi’s policy is not to comment on VW models. From the time it began operations in China, Audi has been the preferred vehicle of government officials. It has also been linked, in many minds, with government excesses.

VW, on the other hand, is seen as a mass-market vehicle because of its low-end Santana sedans. They have become the favorites of the Shanghai taxicab industry. So, it makes sense that if the automaker offers a top model, it won’t be seen as a luxury, but rather as a near-luxury.

Versions Of The Phideon

Plans call for the Phideon to be offered in two versions, gas-engined and as a plug-in hybrid. The top of the Phideon lineup will be offered with a 300-horsepower 3.0-liter V-6 mill. It will also be the first VW to use a camera-based night-vision system.

Whether Phideon succeeds or not will be a matter of price, Yale Zhang, managing director of Automotive Foresight, told Automotive News. At $53,273 – 359,000 yuan – its starting price is about 100,000 more yuan than the Ford Taurus, which had a very successful debut in China last November as a luxury model. Sales for the first half of 2016 outstripped all sales for Ford’s Lincoln lineup.

Phideon is the automaker's second attempt at a flagship sedan in the last 14 years. Disappointing sales forced VW to pull the plug on the luxury Phaeton model. The Phaeton, a global model, competed with the likes of the Audi A8. Phideon is a flagship only in China, where it is available.

The automaker will consider opening the Phideon and selling beyond China if it thinks the market is there.

Sales projections are in the 1,000-2,000 range annually.


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Comments

I had a friend whose grandparents were well-to-do farmers in the Midwest. They always drove Buicks because driving a Cadillac would have appeared too pretentious... They bought a new one every year. This VW move seems like they are providing a solution to the same psycho-graphic. A completely different strategy than was used for the Phaeton. That model was a test for cost control and in that arena it was a huge success. VW engineers were tasked with developing a luxury car that would hold its own against the BMW 7 or MBZ S, but for a lot less money. The beauty of the project is that the cost-sensitive engineering allowed the introduction of the Bentley Coupe - a Phaeton platformed vehicle with a "Bentley" motor that was hugely profitable for VW and that drove the Bentley brand into the forefront.
I remember selling my boss' Phaeton about a decade ago and it was an interesting exercise. It was a one-off with four places instead of five. The seats were like very plush and almost like formal parlor chairs. You are right, it was quite an interesting exercise. BTW, I was the eBay sales manager for my old dealership and I put the Phaeton up there. It got the price we wanted and then some.