Volkswagen shrinking next-gen Phaeton

Contrary to the trend for automakers to increase a car’s size with each new model change, Volkswagen is planning to shrink its flagship Phaeton sedan for the all-new 2010 model. The announcement comes straight from VW boss Martin Winterkorn who told reporters at Germany’s Der Spiegel the next Phaeton will be based on the next-gen Audi A8 with the two vehicles sharing many components. However, to differentiate the two, the Phaeton will feature much shorter front and rear overhangs.

VW is expected to make substantial savings because there’s no need to develop expensive components such as transmissions or powertrains. The current model Phaeton never managed to meet its projected sales expectations, with only a quarter of the 20,000 planned units rolling off the showroom floor.

The Phaeton had several pitfalls going against it. Unlike its aluminum constructed Audi A8 sibling, the Phaeton weighs too much, lacks performance and is very thirsty. The VW label also lacks the brand cachet needed in this premium segment. The German giant won’t be making the same mistake with its next version. According to the source, the new Audi A8 will be larger than the Phaeton, which itself will be larger than the A6, and will showcase technologies earmarked for the next-generation Bentley Continental.

Last month, in an interview with Bloomberg, VW of America spokesman Andreas Meurer revealed that the Phaeton would make a return to the US after the slow-selling sedan was pulled from the market in 2005.