Volkswagen Postpones Phaeton

The name "Volkswagen" means "people's car". But the Wolfsburg-based company wanted to distance itself from this image – and planned a move into the luxury-class automobile sector with the Phaeton.

But things didn‘t turn out as planned. Many customers were left empty-handed at the end of May, when only 250 instead of the planned 600 cars were ready. Only 18 to 20 cars rolled off the assembly line per day, instead of the expected 25 to 30.

VW was forced to postpone production due to the complicated electronics of the car. Problems had surfaced in the software for the navigation and steering system, designed by VW and Siemens.

"The production process will begin only after we've reached 100 percent operational reliability," said VW board member Folker Weissgerber last week.

These difficulties are now cleared up, the company said Monday, and it can get busy catching up on the production backlog.

Weissgerber stresses that VW has not lowered production figures in the long-term. By 2004, production will rise from 18 to 20 units daily to some 70 automobiles. VW is aiming to sell around 20,000 Phaetons per year – at a price of up to 100,000 euro ($100,880). Half of these are intended for the U.S. market, where the model is called "Fiton".

Until now, around 700 cars have been built. Most have gone to dealers as demonstration cars. Delivery to private customers will begin at the beginning of September at the latest. According to VW, it has received more than 12,000 requests for test drives.

The Phaeton will compete against Mercedes' S-Class and the BMW 7 series.

It is supposed to be the official car for German Chancellor Gerhard Schröder, who is up for re-election in September. His competitor Edmund Stoiber, a strict supporter of Bavarian business, will probably choose a luxury-class unit from his region, such as a BMW.