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Volkswagen's Luxe Affair

Volkswagen shed its “people’s car” image with luxury marques, and now debuts a fleet of high-priced rides from its core brand
Paul A. Eisenstein
From the Print Edition:
Andy Garcia, Mar/April 2004

It has the look of a crystal cathedral, a temple of glass and steel standing in sharp contrast to the baroque ruins of old Dresden. With its palaces and cathedrals of limestone and marble, that ancient city was blasted into near-oblivion by Allied bombers in the final days of the Second World War and is only now being rebuilt. Yet the Glaserne Manufaktur is a fitting metaphor, not just for Dresden’s slow rebirth, but for the company that has built this “Transparent Factory.” Had it not been for the keen eye of a British officer and the counterculture tastes of American youth, Volkswagen also would have vanished beneath the war’s rubble.

Envisioned by a madman and crafted by a mechanical genius, Volkswagen AG has traveled a long, strange road that few automakers have even approached. Conceived as a car to put the German masses on wheels, VW is now one of the world’s largest luxury manufacturers, with a collection of enviable marques under its control, including Audi, Bentley, Lamborghini and Bugatti. And now, with the new plant in Dresden, Volkswagen intends to drive its core brand upmarket. But is the world ready for a luxury car for the masses?

You don’t need a degree in manufacturing to realize that the Transparent Factory isn’t your typical car plant. Tour guide Doreen Kretzschmar likens it to “a sitting room,” and with its massive walls of glass and floors of polished Canadian maple, it’s as much art as assembly line. Indeed, the Glaserne Manufaktur serves double duty as both showroom and production plant for the new Phaeton luxury sedan. Potential customers are invited to stop in for a visit. They can begin by dining in a four-star restaurant, then retire to the high-tech showroom to choose leathers, woods and paint colors and watch as their car is constructed by a sophisticated virtual reality system. Insert a digital portrait and they’ll drive up to world landmarks, such as Stonehenge or the Eiffel Tower.

Once the order button is pressed, a complex dance is set into motion. The body of a new Phaeton is stamped and welded together at a plant 100 miles away—the same facility that produces the body for the new Continental GT, which is built by VW’s British subsidiary, Bentley. Smaller parts are marshaled at a warehouse just outside Dresden, then delivered on a special trolley line.

The Transparent Factory’s 250 workers only handle final assembly. Unlike a traditional automotive plant, where jobs are completed in cookie-cutter fashion every 50 to 60 seconds, each employee will spend up to a half hour on a single vehicle, carrying out as many as 100 different tasks. State-of-the-art systems improve ergonomics and reduce defects. It is, declares plant boss Manfred Saaketo, “the most modern manufacturing [operation] in the world.” Maybe so, but it won’t win any awards for efficiency. Even on two shifts, daily output is a meager 30 to 40 cars, barely what a single line at VW’s home plant in Wolfsburg produces every hour like clockwork.

As each Phaeton is completed, it is shuttled automatically to a towering glass silo where it will wait for a transport—or a customer can pick it up. Indeed, a sizable portion of buyers do visit the plant, either to place their orders or to take delivery.

With a price tag starting at $65,900 and running to $87,890 for the top-line model with its unusual W-12 engine, the Phaeton is by far the most expensive vehicle Volkswagen has ever produced. The “base” model is $20,000 more than the lavishly equipped Touareg sport-utility vehicle and nearly twice the price of a fully loaded Passat W-8. And it’s a far cry from the $1,500 Beetle that became an icon for American youth in the ’60s, in the process opening the door to affordable imports.


Quirky and idiosyncratic, the Beetle may be the only positive legacy of the Third Reich. The word “Volkswagen” translates into “people’s car,” and in 1934, that’s precisely what Adolf Hitler and the German Automobile Manufacturers Association had in mind. Desperate to shake off the Depression and hoping to put his country on wheels, the Nazi leader turned to Ferdinand Porsche, a man more often associated with the sports cars that bear his name.

Porsche produced a series of prototypes, the very first bearing the basic shape that would remain in production for nearly seven decades. The first car rolled off the assembly line in 1938, the Nazi propaganda machine pulling out all the stops to promote the accomplishment. “They really knew how to stage things. SS troops lined the road, along with all sorts of German military hardware. Propaganda minister Joseph Goebbels spoke and then Hitler, who gave a speech about bringing the car to the German people,” recalled Gordon Wilkins, a British journalist who had the distinction of being the only man to attend the launch of both the original Beetle and the car reborn nearly 60 years later. That first car “was pretty crude, but the target price was about the same as a motorcycle with a sidecar.”

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