2004 VW Phaeton V8 and W12

A $106,615 Volkswagen arrived for testing the same week Mercedes-Benz and BMW both announced they will build tiny, inexpensive cars. Are we dreaming? Nope. Manufacturers increasingly want to play in all segments and VW wants the greater profits available from sales of luxury cars. It needs buyers who can say with a straight face, "I paid $106,615 for a VW!" Prices: Phaeton V8: $64,600 base; as tested, $72,365; Phaeton W12: $94,600 base; as tested, $106,615. Warranty: 4 years/50,000 miles.

First Glance

We're on a mystery tour, you and I. We're trying to discover why this 2004 Volkswagen Phaeton W12 costs $106,615. Look at it from afar and you'll agree that this full-size car doesn't attract attention, doesn't shout "I cost a bundle!". It rides atop 18-inch alloy wheels (17 for the V8 Phaeton), has a high gloss paint job that added $2,000 to our tester's base price, and has a large VW logo front and rear. Not exactly prestigious. The W12 doesn't even stand apart from its less expensive brother, the V8 Phaeton. They're almost identical except for the the number of cylinders under each hood. You'll have to pay $30,000 more and a $3,000 gas guzzler tax to drive the Phaeton W12 - which, coincidentally, is rated 12 mpg in the city (19 on the highway). The V8 Phaeton (15/22 mpg) and the V8s of competitors are so smooth and powerful that you wonder why anyone would want a 12-cylinder, a configuration formed for the W12 by joining two VR6 engines side by side to a common crankshaft. Less vibration? A little, but not $30,000's worth. More horsepower? Yes, but the V8 Phaeton has plenty at 335! No matter how hard you look at this car, it doesn't seem to justify its price. Let's open some doors, slide inside and see if the answer lies there.

In the Driver's Seat

Both the 2004 VW Phaeton V8 and W12 have proper bar door handles and all doors open very wide, almost to 90 degrees. Entry is easy, but closing the door requires leaning waaaay out. The driver's seat adjusts 18 ways and you could spend days trying to find a perfect combination. It can heat or cool your tush also. But it isn't super comfortable and doesn't justify a $106,615 price tag. There's wood and leather everywhere - true of all luxury cars these days. There are air bags front and sides for all outward seats and twin head curtains run the length of the car. True for all top luxury cars today. There's a navigation system that is not at all intuitive to operate and never displayed street names for me. There's a big sunroof, but you're paying a forture to drive a quiet car, so why open a noisy sunroof? There are grab handles above all the doors. There are temperature controls for the rear-seat occupants because the Phaeton is divided into four climate zones. There's power everything, a "switchblade" remote key fob, but nothing pioneering or special. Now we're in trouble because nothing inside the Phaetons gives us the answer to our mystery. So it must lie in the driving experience. Let's fire one up!

On the Road

Crank up a 2004 Phaeton V8 or W12 and there's no roar from the engine. These are quiet, almost vibration-free engines. Both models have all-wheel drive; the W12 has a five-speed automatic transmission, the V8 a six-speed automatic. Each reaches 60 mph in about six seconds. It's smoothness all the way, like a rocket launch, not an afterburner kick. Put the car in reverse and an ultrasonic parking assist system lets you know if objects are close. Pull onto an interstate and set cruise control. Look at the 200-mph speedometer, with its insufficient contrast. Notice how the transmission sometimes kicks down on deceleration to use the engine for braking. Nice, but .. it's not what's here that is of concern; it's what isn't. In reverse, notice that there is no rear-view camera, as Lexus, Infiniti and others have. The VW cruise control is not adaptive, as are ones in Mercedes-Benz, Jaguar, Lexus and others. The VW headlights leave an uncovered dark spot on the left side of the driver's lane as the Phaeton turns left! Lexus and Mercedes-Benz offer headlights that turn with the wheels, to light up the area you're approaching. So, we find the Phaetons short on important convenience items. Guess we must go to Germany to solve our mystery.

Journey's End

Nothing yet discovered makes the 2004 VW Phaeton superior to other superb, often less expensive, luxury cars. So why are Phaetons so expensive? Our mystery tour moves to Dresden, Germany. Here we find "The Transparent Factory", possibly the world's finest auto production facility. Here, VW builds Phaetons behind walls of glass. We see partially assembled Phaetons hung from overhead rails. We see robots positioning windshields. We see a six-story tall glass cylinder displaying new Phaetons. Everything is clean here. Noise is minimal. This is ... magnificent. And seeing it, we can solve our mystery, for we know two things: (1) The investment of $186-million Euros in this plant means VW is serious about making luxury cars; and (2) there must be a mighty big mortgage on this glass palace. You can bet that buyers of Phaetons will pay it down. The pity is that Phaetons don't rise above the competition. They're good, but not best. And VW has an "image" problem. The "People's Car" brand lacks prestige. This elusive is immensely important to luxury car buyers. Luxury car brands bespeak owners as elegant, powerful. During test week, the $106,615 sticker price of the Phaeton W12 brought only guffaws and the same repeated question: "Why?"