Cost-cutting VW bets big to revamp loss-making luxury Phaeton
* New high-tech Phaeton to hit market 2017-18 - sources
* Model's revamp may cost up to 650 mln euros - analyst
* Comes as VW engaged in 5-bln-euro cost-cutting drive
By Andreas Cremer
BERLIN, Jan 28 (Reuters) - With Volkswagen having embarked on a big cost-cutting drive, industry experts are baffled why the "people's car" maker plans to spend millions of euros upgrading a loss-making luxury saloon.
The 76,000-euro ($86,000) Phaeton, a pet project of Chairman Ferdinand Piech, has never met VW's original sales target of 20,000 cars annually. Analysts say the executive saloon, which cost more than 1 billion euros to develop and came out in 2002, should be axed.
But sources at VW told Reuters that the company is now planning a more advanced version of the Phaeton - described by Bernstein analyst Max Warburton as one of the three "most loss-making European cars of modern times".
The plans appear all the more perplexing to analysts as VW has pledged to make annual cost savings of 5 billion euros at its passenger-car brand by 2017, as the world's second-biggest carmaker by sales seeks to narrow the gap with global leader Toyota.
Announcing the "efficiency programme" last July, Chief Executive Martin Winterkorn promised "painful action" to revive the core brand where profit margins have been languishing due to a proliferation of models and parts. Continuación...