• Brandweek, Wednesday, November 16, 2005 1:30 PM

Volkswagen's U.S. marketers took a gamble on their upscale brand, the VW Phaeton. Yesterday they accepted the fact that they'd lost. The car, launched two years ago with a minimum striker price of $64,600, is being discontinued in America. VW was betting that affluent, status-conscious car buyers would buy the Phaeton, despite the fact that it came from a company not usually associated with high-end products. The car, priced comparably with BMW, Mercedes, and Lexus, received favorable reviews but did not sell well. VW sold 686 of the cars through October, down 52.1 percent versus the period last year. The company had hoped to sell up to 5,000 the cars per year in the U.S. The move represented more bad news for the struggling automaker, whose overall sales are down 9.7 percent through October. In the first nine months of the year, the company has lost $960 million. In the hope that exciting new advertising might help sales, VW in September fired its long-time ad agency, Arnold Worldwide, and signed hotshop Crispin, Porter and Bogusky, Miami, which had handled BMW's Mini division.

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