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Volkswagen Australia has given up on its plan to import the German carmaker's Phaeton flagship.
The Phaeton competes against the BMW 7-Series, Mercedes-Benz S-Class and Audi A8 in Europe with a small price advantage.
Volkswagen Australia has been keen on importing the loaded limo since 2003. The plan had been put on hold, until the company came up with a new plan to bring the Phaeton to Australia.
It is understood the Phaeton would have been cheaper than the model sold in Europe, aimed at the less expensive Mercedes E-Class, BMW 5-Series and Audi A6.
Volkswagen Australia managing director Jutta Dierks says the Phaeton would have had a tough time in Australia if it was priced the same as it is in Europe. "The gap between Passat and Phaeton would have been too big," Dierks says.
She says Volkswagen is missing out on customers who want something bigger than the mid-sized Passat but don't want to buy the all-wheel-drive Touareg.
The decision for Volkswagen, which started producing the humble Beetle, to stretch out and build a large luxury car is a controversial one.
Critics argued the brand, which also sells affordable city cars such as the Fox and Polo, didn't have the street cred to match Mercedes and BMW. European buyers agreed early on and sales struggled, but impressive diesel engines have seen sales lift slightly.
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