Background To begin with, it should be emphasized that Volkswagen is the company that positions itself as the manufacturer of reliable and comparatively cheap cars. Surely, the presentation of high-class Phaeton cars failed, as customers do not associate Volkswagen with luxury cars. In the light of this fact, it should be stated that the real problem may be covered in the managerial drawbacks, and may be solved in several ways. Current Status The model was represented in 2005, and the 2009 model was subjected to minor facelift changes. The daytime running lights were modified, and the new Fuel Stratified Injection became available for the models. The company aimed to reintroduce the model in the USA in 2009, nevertheless, the results of this action are still invisible. As for the previous sales, up to 20,000 models were delivered to Germany (of 25,000 produced). Nevertheless, the luxury car segment is dominated by the Mercedes Benz S-Class and BMW 7 series, however, both models are achieving more than twice the sales volume of the Phaeton in 2008. SWOT Analysis           Positive                                            Negative                                               Strength                                            Weakness                                     Internal  Reliable Cars                                       Improper positioning of the new model                  Well known brand                                    Lack of proper promotion                               Professional Management Team                                                                     External  Opportunity                                         Threat                                                 High awareness of the brand in the largest markets  High competency in the sphere of luxury cars  Thus, the problem of the company is the improper positioning of the new model. In spite of the fact it is positioned as the luxury car on the largest markets, lack of proper promotion appeared to be the largest drawback in the allover marketing strategy. The target audience is just unable to associate the company with luxury cars, thus, the advertisement department should deal with this problem. High competency in the market of luxury cars should not be regarded as an obstacle, as this market is featured with the essential conservatism among customers: up to 80% of customers prefer some particular car manufacturer. Consequently, if Volkswagen admirers find out about the new model, there will be high credibility of buying Volkswagen Phaeton by them. Alternative Solutions Originally, the problem may be solved with different approaches. From the marketing point of view, the obvious solution is to get back to manufacturing the cars which the customers got used to knowing. Originally, Volkswagen is associated with small, ugly and reliable cars, which are comparatively cheap and available for almost all the social classes. Nevertheless, the company will have to reject manufacturing the Phaeton model and forget the sector of luxury cars. The managerial solution will be to produce these cars in China. This will provide the reduction of the price for the model; however, the reliabi