Online Extra: For VW's Phaeton, a Factory Wouldn't Do

A trip to the plant where the new $80,000 sedan is artfully assembled is more like going to a high-tech opera

Take a step inside Volkswagen's new Dresden factory and get a glimpse of the high stakes in competing for luxury-car customers: soaring steel and glass architecture, and hardwood floors on a pristine assembly line where each car under construction looks like a piece of 21st century art. Even the workers, in virgin-white overalls, add to the picture of elegance. No grease smudges or welding noise here. This tranquil temple, designed by Munich architectural firm Henn, is a testament to modern production -- and the taste and refinement of people who can afford to pay $80,000 for a car.

When Volkswagen -- literally the peoples' car -- made the bold decision in the late 1990s to push its brand upmarket and take on BMW and Mercedes- Benz in top-of-the-line sedans, it knew it had to make a dramatic statement. The styling and technology behind VW's new Phaeton sedan, launched in Europe last year and coming soon to the U.S. market, gets plaudits for advanced engineering and sleek styling.

That wasn't enough. The birthplace itself of the Phaeton had to transform VW's image from a maker of reliable cars to one that purveys sumptuousness and status. With its elegant, no-expense-spared production line, Volkswagen sought to establish a new benchmark in crafting luxury that would appeal to its target market.

Indeed, the 187 million euro factory, which ramped up last year, was designed to thrill. Call it a new German marriage of automotive technology, performance, and art. From a museum-like gallery built above the production line, coddled customers have a bird's-eye view of assembly in the works.


  The hardwood panels in the floor advance at the imperceptible pace of 3 centimeters per second. And when a worker has finished installing the parts on his trolley, the robot-like platforms, precision-timed and guided by infrared-assisted magnets, eerily whisk themselves -- completely without human intervention -- to the elevator. After it descends, it picks up parts for the next car.

Finished models, for now mostly black and silver, likewise are guided automatically into an elevator that lifts and parks them in an eight-floor glass tower, visible from nearly every part of the transparent four-story plant. Their well-shaped noses face the elegant restaurant where a pianist plays a classical repertoire to a full dining room -- locals as well as executives.

Customers fly in to Dresden -- "Florence on the Danube" -- to outfit their cars, selecting the colors for the supple leather interiors and wood paneling. But that's just an excuse for the kind of weekend mix of purchasing and pampering that the rich adore. When clients have been through the driving simulator and have decked out their car, Phaeton staff help arrange a visit to the opera and a tour of the historic center of town -- or perhaps to the Meissen porcelain plant.


  Last year, when floods damaged the Dresden Opera House, VW hosted 17 evenings of the opera Carmen in the Phaeton plant's spacious visitors' center. All the while, in the background, masterful mechanics on the night shift continued their hushed art of assembly.

With some 3,000 units sold to date, it's too early to say if VW's pitch will win over loyal drivers of the world's most exclusive cars. Management says the real test will come in 2004 -- when various models have all hit the market. Until then, the Dresden plant remains an artful experiment in luxury retailing.

By Gail Edmondson in Dresden

Patricia O'Connell

    Before it's here, it's on the Bloomberg Terminal.