Volkswagen CEO Pischetsrieder Says Phaeton Styling was a Mistake

The Phaeton is a prime example. While intended to steal sales away from BMW, Mercedes-Benz and to some extent Lexus,

Both Skoda and Seat (Toledo shown here) have sold versions of the Jetta with more features and better performance for much less money, to the detriment of VW sales. (Photo: Volkswagen AG)

Audi A8 owners are more likely to buy into the model's understated elegance and luxury appointments. It also drives more like an Audi than its rivals, while offering all-wheel drive, and Audi staple. But the Phaeton isn't the only internally parasitical predator. VW's Passat has long hindered A4 sales in North America, by offering a larger A4 with more features for less money. While the W8 model has now been canceled due to slow sales, the 1.8T and 3.0-liter V6 models still compete directly with Audi's small car.

In Europe, the problem is exacerbated by the internal competition of Spain's Seat and Czechoslovakia's Skoda, both

Aside from internal competition, Volkswagen has also spent considerable resources maintaining their premium brands like Bugatti, Lamborghini and Bentley. (Photo: Trevor Hofmann, American Auto Press)

sold throughout the EU. Both Skoda (Octavia) and Seat (Toledo) have sold versions of the Jetta (Bora in Europe) with more features and better performance for much less money, to the detriment of VW sales. This same scenario gets played out across almost the entire range, some VW models faring worse than others.

But that's only the entry-level brands. Pischetsrieder has also had to maintain the on-again, off-again Bugatti supercar, plus ultra-premium brands Lamborghini and Bentley, both requiring much financial nurturing by Volkswagen ahead of their new products paying for themselves.

Along with the Phaeton's Dresden plant, VW operates 44 factories in 17 countries while employing approximately 330,000 workers globally.