Nov. 22 (Bloomberg) -- Top Volkswagen AG executives responsible for U.S. sales have been leaving their jobs at a rapid pace lately, which shouldn't be a startling development, given VW's troubles here.

The latest termination came rather abruptly last week, on the heels of indiscreet public criticisms by Audi's chief of U.S. sales about the VW Phaeton, a luxury sedan that flopped. Axel Mees, the departing executive, had been in charge of VW's luxury Audi franchise for less than a year.

Had Mees simply criticized the Phaeton his offense might not have been so egregious. Apparently Mees also had the temerity, according to press accounts, to criticize Ferdinand Piech, venerable chairman of Volkswagen's supervisory board. Piech had championed Phaeton in his previous role as chairman of the management board.

Anyone who was wondering now has an answer to the question of how much clout Piech still wields at VW since turning the chief executive role over to Bernd Pischetsrieder in 2002.

The Phaeton ``could be the best car, but I would still not buy it because it has the VW logo, and because I have to go to a VW dealership where the salesmen are used to selling Jettas and Golfs,'' Mees said on Nov. 8, according to Automotive News, a trade publication.

Piech ``was an engineer and he wanted to prove that he can build great cars, and he didn't look at the marketing aspect, the brand aspect,'' Automotive News quoted Mees as saying.

Mees on Target

Sadly, Mees was absolutely on target. The Phaeton has been a disaster, almost unsaleable for precisely the reasons that he articulated -- not because the model is deficient in any way, rather because most buyers won't consider spending $80,000 on a luxury car carrying a VW logo, which represents affordability.

VW has sold 1,433 Phaetons in the U.S. so far this year. When it was unveiled two years ago, U.S. dealers were skeptical, even with Piech's assurance that the model would attract buyers.

The far more serious issue for dealers is the 13.7 percent decline of VW and Audi sales in the U.S. through October to 281,684 vehicles. And on top of this year's results is a three- year sales decline. The strength of the euro versus the U.S. dollar, combined with VW's distaste for rebates, has made their cars a tough sell.

On Oct. 14, Volkswagen announced the retirement of Gerd Klauss, 59, chief executive of its U.S. subsidiary. A spokesman cited age and health issues; Klauss had hip-replacement surgery in July. On Nov. 12, the automaker announced the departure of Jens Neumann, 59, a member of the management board in charge of strategy and North America.

Product Mistakes

U.S. dealers have expressed dissatisfaction because the VW models they regard to be the most important, the Golf, Jetta and Passat, haven't been replaced in almost seven years. That changes this March with arrival of the new Jetta, followed by the new Passat in August.

``Volkswagen's product cadence has been very poor,'' said Csaba Csere, editor-in-chief of Car and Driver magazine. ``What's happened isn't Gerd (Klauss)'s fault. There have been some real strategic product mistakes, and Phaeton is a key one.''

Csere also criticized Volkswagen for taking too long to introduce new models in the U.S. after their initial introduction in Germany. ``Mercedes and BMW are able to do this almost simultaneously,'' he said.

Jean Jennings, editor-in-chief of Automobile, said ``VW has a quality problem, and not just in J.D. Power, but also in Consumer Reports and elsewhere. Their German operations seem out of touch with the U.S. They're not giving the U.S. their due.''

Ignoring U.S. Market

While several Japanese automakers have made the U.S. market their specialty outside of Japan, VW has sometimes seemed nonchalant about the U.S. market. It opened and then closed a U.S. factory, and only began selling the Touareg sport utility vehicle in the summer of 2003, a mere decade or so after the trend clearly had taken hold.

The Jetta compact sedan, which has sold 2.2 million units in the U.S. and Canada since the first one debuted in 1980, will have a new and more powerful 2.5-liter base engine generating 150 horsepower. The current model has a 2-liter, 115-horsepower base engine.

Steve Keyes, a VW spokesman at the company's U.S. headquarters in Auburn Hills, Michigan, said, ``We also have a small SUV and a roadster coming. And we'll be spreading our introductions out.''

Remarkably, several U.S. dealers said they were optimistic that Volkswagen may have weathered a rough patch and now is poised for sales gains on the strength of new models and improved coordination with the home office in Wolfsburg, Germany.

Even so, blunt criticism of Ferdinand Piech will surely be detrimental to a VW executive's career for the foreseeable future.

To contact the writer of this column: Doron Levin in Southfield, Michigan, at dlevin5@bloomberg.net.

Last Updated: November 22, 2004 00:19 EST