Trying to figure out the logic of Volkswagen concerning the next-generation Phaeton is a very difficult task. The German automaker loses 28,000 euros (about $31,598) on every Phaeton built. Also the automaker has announced a cost-cutting plan that a plan to save 5 billion euros ($5.7 billion) annually in the coming years. Yet, Reuters is reporting that Volkswagen is going forward with the next-generation Phaeton due sometime in 2017 or 2018.
"Economically speaking, it's the most irrational project. Piech and Winterkorn simply cannot let go of their fondness for luxury products,"said Evercore ISI analyst Arndt Ellinghorst.
How irrational are we talking about? Analysts say that next-generation Phaeton using the MLB platform could cost as much as 650 million euros (about $737 million). Even some Volkswagen executives are wondering why the Phaeton is still around.
"That's a dangerous question. It's an image bearer with no relevance for volume," said Volkswagen's U.S. Head Michael Horn.