The Luxe Bug Volkswagen's handcrafted, $100,000 Phaeton is a giant evolutionary leap from its insectile forebears. In fact, it may be the most compelling high-end vehicle on the market today.
By John Tayman

(Business 2.0) – Automakers are not by nature sympathetic entities. Like all good manufacturing multinationals, they tend toward faceless, rapacious caricature: Their factories are windowless belching boxes, their salespeople symphonies of plaid and push, and their products--that is, the cars--usually overpriced and often underwhelming. So forgive me this confession: I feel sorry for the world's fourth-largest auto manufacturer, otherwise known as Volkswagen.

Several years ago, VW decided to create a luxury automobile. It rerouted half a billion dollars and built a stunning plant known as the "transparent factory." The assembly line is wrapped in glass, the maple floors gleam, and not a smudge of smoke is to be seen. Fleets of engineers tweaked and tightened the plans for the car, designers smoothed and polished, and finally, when everything was primed, 250 workers began to lovingly assemble each vehicle by hand, at a rate of about 35 a day. (A conventional plant can crank out 2,000 units per day.) The shiny result was a 420-horsepower, 12-cylinder, wood-trimmed, Mercedes-battling marvel that VW calls the Phaeton. It might be the most compelling luxury vehicle currently sold. It is overwhelmingly the best value among high-end luxury cars. Without question it is a magnificent vehicle. And yet the company can't give them away. Blame two minor faults: a VW badge on the front grille, and another on the trunk. Phaetons are selling at the horrific rate of five per day. Poor, poor VW.

Given that the company is best known for its economical little bubble bangers, and thus the brand imparts none of the cachet of Mercedes or Jaguar, it is understandable that the notion of paying almost $100,000 for a Volkswagen might give the shopper pause. Psychologists who study such things refer to the "emotional engagement" of purchasing what is perceived to be a prestige brand. In other words, the snob appeal. Glide up in a $100K Mercedes and the neighbors take note: You are, implicitly, better than they are. Glide up in a VW, even a costly one, and the neighbors wonder why the help is parking out front. Of course, there's an irony to all this. Thanks to industry consolidation, branding is blurry these days. That Mercedes, after all, is part Chrysler. Your Jaguar is really a Ford, and idiosyncratic Saab is actually just another word for General Motors. Even luxury rarities such as Bugatti and Bentley and Lamborghini are brand comminglers, all three being part ... Volkswagen. So to do justice to the Phaeton requires a visit to a mythical and perfect world. A world with no name brands. (I'll pause here and allow the marketers among you to regain your breath.)

Ready? Now pop the hood. The Phaeton essentially has two V6s crammed in there, each canted 72 degrees, mated at a shared crankshaft, and organized so that the whole power plant fits inside the tidy engine compartment. In the cabin, behind triple-sealed doors, you hear nary a thrum or burp, even while accelerating. Though it produces an amazing 406 foot-pounds of torque, the engine is so velvet-smooth that the only aural intrusion comes after you pass legal limits and the side mirrors begin to carve air. Needless to say, the all-wheel-drive 12-cylinder machine is never underpowered; in comparison, the Mercedes S500--a competing vehicle with about 120 fewer horses--drives like a Dodge Dart.

It's a handsome slab of a car, having been painted twice and sanded in between, while microscopic filters in that transparent factory hoovered particulates from the air. Thus the depth on the finish is astounding, and given the blunt lines and unfussy design, the Phaeton manages to convey a sort of assured menace. (In some ways it resembles the $150K Bentley, with which it shares components.) And although the company won't agree, one benefit of its low sales to date is that the Phaeton is an appealing rarity on the roads, which at times seem choked with Beemers and Benzes.

Speaking of which, let's do a comparison of interiors, shall we? I'll make this quick: There isn't any. Although every six-figure car offers a high cush level, the Phaeton profits from having been engineered from whole cloth--or rather, whole leather, eucalyptus wood, walnut, and brushed metal. Press a circle of polished wood and, with a pneumatic whoosh, it reveals a cup holder. The seats adjust 18 ways, are heated and cooled, and perform 10-minute massages. A sensible (as compared with nonsensical) navigation system has redundant controls, so you can run the systems--radio, climate, and so on--in the conventional way or via the large display. You can even read the owner's manual onscreen.

Because the company president did not like being buffeted by vents, he demanded that engineers find a better climate solution. They created a draft-free system that uses indirect vents to circulate air in four passenger zones. The niftiest aspect occurs when the vehicle is asked to hurry the climate change: Motorized shutters raise the wood trim across the entire dash, revealing multiple hidden vents, which blast for a few moments before silently disappearing again behind the burled screens.

The Phaeton is not as twitchy a drive as the BMW or as occasionally lumbering as the Mercedes, its two main rivals in this 12-cylinder segment. (And to compete against them, the car has been priced at a loss, and thus can be had--loaded--for $40K less than either.) Though it's not intended as a sports car, anytime you drop a 12-cylinder engine into a vehicle, it's going to be driven as one. Fair enough. Thanks to an air suspension system that glues the car on track and monitors road conditions and acceleration patterns to prevent sway and slide, it handles speed with a surprisingly light touch, especially when clicked into one of two sport modes. Mostly, though, the drive is in keeping with the rest of the car: very confident and loath to trumpet itself. Zooming along at 70, the world a whisper at the window, bathed in perfect temps and perfect leather, nothing betrays that you are behind the wheel of a Volkswagen. (Well, except for the large silver VW logo in the steering wheel.) Instead, what is most obvious is that you're at the helm of a very fine car, which you likely purchased at a bargain price.

And in this perfect world, that's really all that should matter, right?