Volkswagen introduced the Phaeton in 2002 as a direct competitor for luxury brands such as BMW and Mercedes-Benz.
Ferdinand Piech, the former Volkswagen CEO, pushed the company's engineers to develop a luxurious vehicle under the VW brand. They used the same platform from the Audi A8 and built a different bodywork on top of it, resulting in the Phaeton. Another problem was with the nameplate. A phaeton used to be a sport version of an open-top carriage, and the German sedan was neither sporty nor convertible.
The 2005 Phaeton front side looked like an improved front fascia over a Volkswagen Passat B5 facelift from the same era. Its horizontally slated grille and horizontal headlights showed an improved design over its sibling but close enough to resemble it. The Phaeton's profile, on the other hand, was different. Its C-pillar was thicker and wider on the lower side.
Since the Phaeton's wheelbase was shorter than the one offered by the standard BMW 7-Series from the same era (the E65 model), which led to smaller legroom for the rear passengers than its competitor, still, it was more than enough for average-sized passengers. Since it was the most expensive Volkswagen to that date, it featured standard leather upholstery and wood-trims on the dashboard and door cards. A tall and wide center console separated the front occupants, while in the back, it was suitable for two passengers due to the transmission tunnel.
Volkswagen installed a wide engine range for the Phaeton SWB. For the base engine versions, either turbo-diesel or gasoline, the carmaker offered a standard front-wheel-drive system. It was a car suitable for fleets and even taxi drivers. A 5.0-liter V-10 oil-burner or a 6.0-liter W12 filled the engine compartment at the other end of the scale.
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