IT tutorials
 
Cars & Motorbikes
 

Loss-making Phaeton to be upgraded

1/30/2015 7:32:02 PM
- How To Install Windows Server 2012 On VirtualBox
- How To Bypass Torrent Connection Blocking By Your ISP
- How To Install Actual Facebook App On Kindle Fire

With Volkswagen having embarked on a big cost-cutting drive, industry experts are baffled by the "people's car" maker's plans to spend millions of euros upgrading a loss-making luxury saloon.

The €76,000 (S$116,425) Phaeton, a pet project of chairman Ferdinand Piech, has never met VW's original sales target of 20,000 cars annually. Analysts say the executive saloon, which cost more than €1 billion to develop and came out in 2002, should be axed.

But sources at VW told Reuters that the company is now planning a more advanced version of the Phaeton - described by Bernstein analyst Max Warburton as one of the three "most loss-making European cars of modern times".

The plans appear all the more perplexing to analysts as VW has pledged to make annual cost savings of €5 billion at its passenger-car brand by 2017, as the world's second-biggest carmaker by sales seeks to narrow the gap with global leader Toyota.

Announcing the "efficiency programme" last July, chief executive officer Martin Winterkorn promised "painful action" to revive the core brand where profit margins have been languishing due to a proliferation of models and parts.

"It's no longer all about bigger, higher, further," he told managers at a Dresden strategy conference in December. "Now it's about being leaner, faster, more efficient."

His comments echoed VW's plans to reduce the number of costly parts and drop some non-profitable variants from the German group's 310-model line-up as Europe's largest carmaker shoulders costs of future growth and investments in lower-emissions technology.

Revamping the Phaeton will fly in the face of Mr Winterkorn's cost-cutting drive, said Evercore ISI analyst Arndt Ellinghorst, adding that switching production of the model to VW's modular MLB platform could cost as much as €650 million.

"Economically speaking, it's the most irrational project," London-based Mr Ellinghorst said. "Piech and Winterkorn simply cannot let go of their fondness for luxury products."

A new glass-walled factory, R&D outlays and low sales volume led VW to lose €28,000 on each Phaeton sold between 2002 and 2012, Mr Warburton wrote in a September 2013 note.

Unfazed by the losses, VW aims to pit the next-generation model against the Mercedes' €80,920 flagship S-Class, sources said, adding the car may hit dealerships in 2017-2018. A plug-in hybrid version is also planned.

VW confirmed it was planning a successor to the Phaeton, but declined to comment on the details or costs. It also declined to comment on analysts' loss, cost and sales estimates for the existing version, but said the saloon helped to show off its technical prowess.

The company does not disclose sales data for individual brands, only production numbers, which show it produced 5,812 Phaetons in 2013 - the latest annual figures published.

Mr Stefan Bratzel, head of the Center of Automotive Management think-tank near Cologne, said another high-end luxury saloon may overstretch the VW brand, traditionally a mass-market division which in November released a more upmarket Passat. A new Phaeton could also affect sales of VW's other premium offerings, especially the Audi A8 saloon which may share MLB underpinnings with the VW-badged model, he said.

"It doesn't make much sense strategically," Mr Bratzel said. "The business case is equally questionable."

A new Phaeton would struggle against its premium rivals, analysts say. Sales of the model will average no more than 11,900 cars a year in 2017-2020, up from 6,300 this year, according to research firm IHS Automotive.

That compares with annual averages of 85,000 units for the Mercedes S-Class, 64,000 for BMW's 7-Series and 41,000 for Audi's A8 in the four-year period, according to IHS data.

Buyers will never warm up to the notion of a full-size luxury saloon made by the "people's car" brand unless they get a huge discount, a former VW group executive told Reuters.

"This is the inherent problem which puts the car's price positioning and profitability at risk," he said.

The Phaeton is the brainchild of Mr Piech, the mastermind of VW's global expansion and its former chief executive officer, who is well known for outmanoeuvring both rivals and allies. A former Audi North American chief, Mr Axel Mees, was forced to leave the company in 2004 after criticising the Phaeton project and Mr Piech in public.

Meanwhile, Mr Michael Horn, VW's new United States boss, is chasing a lofty sales target of 800,000 VW brand cars by 2018, more than double last year's tally.

He will be tasked with relaunching the next Phaeton in the United States after VW pulled the model from the world's biggest luxury-car market in 2006 because of poor sales.

Asked by Reuters at the Detroit auto show what potential he sees for the model in the country, he was struggling. "That's a dangerous question. It's an image bearer with no relevance for volume," he said.

 
Others
 
- Expressway trial for driverless cars
- Aston Martin SUV in the works?
- The new X5 of BMW
- The new Outlander PHEV of Mitsubishi
- Punchy Little Thing – Ford EcoSport EcoBoost
- Citroën’s style-laden DS models (Part 2)
- Citroën’s style-laden DS models (Part 1)
- Ferrari 458 Speciale – Extreme Sport (Part 2)
- Ferrari 458 Speciale – Extreme Sport (Part 2)
- Ferrari 458 Speciale – Extreme Sport (Part 1)
 
 
Top 10
 
- Microsoft Visio 2013 : Adding Structure to Your Diagrams - Finding containers and lists in Visio (part 2) - Wireframes,Legends
- Microsoft Visio 2013 : Adding Structure to Your Diagrams - Finding containers and lists in Visio (part 1) - Swimlanes
- Microsoft Visio 2013 : Adding Structure to Your Diagrams - Formatting and sizing lists
- Microsoft Visio 2013 : Adding Structure to Your Diagrams - Adding shapes to lists
- Microsoft Visio 2013 : Adding Structure to Your Diagrams - Sizing containers
- Microsoft Access 2010 : Control Properties and Why to Use Them (part 3) - The Other Properties of a Control
- Microsoft Access 2010 : Control Properties and Why to Use Them (part 2) - The Data Properties of a Control
- Microsoft Access 2010 : Control Properties and Why to Use Them (part 1) - The Format Properties of a Control
- Microsoft Access 2010 : Form Properties and Why Should You Use Them - Working with the Properties Window
- Microsoft Visio 2013 : Using the Organization Chart Wizard with new data
programming4us programming4us
 
Popular tags
 
Video Tutorail Microsoft Access Microsoft Excel Microsoft OneNote Microsoft PowerPoint Microsoft Project Microsoft Visio Microsoft Word Active Directory Biztalk Exchange Server Microsoft LynC Server Microsoft Dynamic Sharepoint Sql Server Windows Server 2008 Windows Server 2012 Windows 7 Windows 8 Adobe Indesign Adobe Flash Professional Dreamweaver Adobe Illustrator Adobe After Effects Adobe Photoshop Adobe Fireworks Adobe Flash Catalyst Corel Painter X CorelDRAW X5 CorelDraw 10 QuarkXPress 8 windows Phone 7 windows Phone 8 BlackBerry Android Ipad Iphone iOS
Celebrity Style, Fashion Trends, Beauty and Makeup Tips.