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We Drive This Barn-Find 2004 Volkswagen Phaeton, and It Still Impresses

VW’s most-expensive production vehicle was destined to fail in the U.S., but it shouldn’t have.

Billy RehbockWriterRobin TrajanoPhotographer

We recently published a brief history of Volkswagen's ill-fated Phaeton flagship sedan. Here's the lowdown: Volkswagen conceived the Phaeton at the behest of Ferdinand Piëch, the then-chairman of Volkswagen Group. The luxury sedan made its debut at the 2002 Geneva International Motor Show; it was manufactured in Dresden, Germany, in a state-of-the-art facility called Gläserne Manufaktur, or Transparent Factory (the same plant will now build the all-electric ID.3 hatchback).

While the Phaeton was successful enough globally to be produced through 2016, it only lasted until 2006 in the U.S. market because Americans had a hard time accepting a Volkswagen as an expensive luxury car. Our own Robert Cumberford had a hard time envisioning it in the showroom alongside VW's other more mundane offerings, especially with a price tag that started north of $70,000. Volkswagen ultimately sold just more than 2,500 units across all engine options in the U.S. This is the story of one of those cars.

2004 Volkswagen Phaeton: Basically a Barn Find

I got a tip from my dad that my hometown Volkswagen dealership had been servicing a W-12-equipped Phaeton; I reached out to its owner, who gave the greenlight to drive and review it. But the prospect of driving this pristine example of VW's one-time flagship made me nervous. As a life-long VW nut, I held the Phaeton in high esteem.

This specific example was found in a storage shed on a Volkswagen dealer's lot. The nose pointed outward, with no badge to show whether or not it had a W-12 engine. When Steve Cornelius, owner of Stevens Creek Volkswagen in San Jose, California, and his employees went around to the car's rear, they discovered there indeed was a chrome W12 emblem on the trunk lid. To confirm, they popped the hood and were indeed greeted by a 12-cylinder engine—and the family of rats that had made their home within its bay.

How did the car get there without the Stevens Creek staff knowing about it? Cornelius owns the storage lot as well as the dealership, and the Phaeton's owner stashed it there. The VW's owner eventually died before retrieving it.

As optioned, Cornelius's 2004 Volkswagen Phaeton wears Klavierlack paint over a tan leather interior, which was applied at VW's Zwickau facility, one of the most technologically advanced plants in its day. (The car famously shared its platform with the Bentley Continental and Audi A8.) Only 452 12-cylinder Phaetons were sold in the U.S. for the 2004 model year, so this was a fairly rare find.

Work to be Done

After obtaining the car from the previous owner via a lien sale, a six-month process, Cornelius and his crew got to work diagnosing the Phaeton. The car's air suspension system had collapsed, but the computer system worked just fine. We chatted with Joe Castelino, the sales manager for Cornelius's dealership and a certified Phaeton advisor who oversaw the car's restoration.

"We called VW support to say, 'Hey, this car hasn't started in five years, what do you recommend?' he said. 'And their answer was, 'Good luck. '"

After actually getting the engine to start and a quick test drive to evaluate the 2004 Volkswagen Phaeton's condition, Castelino and his co-workers decided the car was worth keeping. They rebuilt the front end and reinstalled the suspension's airbags. They also serviced the transmission, gaskets, and axle-shaft seals, and repaired the rodent damage.

Regarding how they sourced parts for the Phaeton, Castelino said Volkswagen "kept referring us to their older catalogs, which thank God we, as a dealer, have had the foresight to keep."

The dealership had also kept its old diagnostic scanners; it said it is one of the only dealers that still has a functioning 5150 scanner. "We have all of our old technical books, so we were able to go back to our library of stuff and resort to that," Castelino said.

Because the Phaeton was a luxury product, VW offered a VIP program for customers, and provided Cornelius with financial assistance for some of the parts. For example, "When you call in for the air suspension, you're able to just purchase one strut and they support us with the other three," Castelino said. The Phaeton has a reputation for being horrifically expensive to repair, but VW does still provide support for parts, though it certainly helps your cause if you're a dealer.

The OEM-Plus Look

Cornelius wanted this 2004 Volkswagen Phaeton to have an "OEM-plus" look, so he opted for some massive, black Enkei wheels. We began our test drive-day riding on the 22-inch wheels but swapped to the original 17-inchers mid-day. Both sets of wheels were shod with quality tires: sport summer tires on the 22-inchers, and a summer tire with a taller sidewall on the smaller ones. The additional ride comfort provided by the latter better suited the car's mission; the generous sidewall and well-maintained air suspension worked together to deliver a plush ride.

The Phaeton had the old-school analog version of the mobile-connectivity system which doesn't work quite as well as the newer digital version, so Cornelius had Bluetooth installed. His team wired Bluetooth connectivity to the OnStar button, a Phaeton feature VW licensed from General Motors from 2002-06. Remarkably, the electric-powered trunk, which swings open and closed on gorgeous hinges made by Italian bike manufacturer Campagnolo, still operates smoothly.

The crew made a couple of other modifications as well. Lightwerkz, an automotive lighting company based in New Jersey, installed custom headlights which trade the OEM chrome look for a more subdued and stealthy black housing. The shed-find 2004 Volkswagen Phaeton now uses LED turn signals and daytime running lights. Finally, Castelino led the dealership's technicians in editing the adjustable ride-height settings. The old "high" mode now uses the old "normal" setting, and normal is dropped further so the tires and fender arches are nearly flush.

2004 Volkswagen Phaeton: Test Driving a Dream Car

Castelino took the time to spend a day chaperoning his boss's Phaeton for our photoshoot, and we trekked out to the Alameda, across the Bay from San Francisco, for our drive.

Castelino urged me to get on the throttle and drive the Phaeton like it's a new car. The 6.0-liter W-12 hummed to life, and the black sedan surged forward strongly. The car felt delightfully mechanical, with its huge engine producing a still-potent 420 horsepower and 406 lb-ft of torque. The hydraulic steering rack isn't too heavy to be cumbersome, and it has plenty of feel to instill confidence in the driver.

The Phaeton's torque curve is broad, with peak twist kicking in at 3,000 rpm. The five-speed automatic transmission, which routes power to four wheels via Volkswagen's 4Motion system, is considerably aged compared to modern automatic gearboxes, but it's responsive enough to not distract from the 12-cylinder engine's smoothness.

But the great power and body control are only the beginning of where the 2004 Volkswagen Phaeton impresses. Its interior has features that are still fairly uncommon, like ventilated and massaging seats. The adjustable air suspension, while it's one of the greatest liabilities of ownership, is as comfortable as it is expensive to maintain.

The 2004 Volkswagen Phaeton, an Underappreciated Classic

In all, Cornelius has been happy with his Phaeton so far; at the time of our interview, it was his daily driver.

"Well, the car has 140,000 miles on it and doesn't burn a drop of oil, and mechanically it's just been completely solid," he said. "I like finding used cars and bringing them back to their glory, and these kinds of restorations. So, this car was kind of just done for passion, but now that I drive the car, I just love it."

If you can find a Phaeton W12 and have the funds to foot the repair bills, it's still a sublime car to drive and an underappreciated modern classic. For a Volkswagen enthusiast, it's a loaded with quirky features, and it should provide its owner a fair amount of bragging rights at European car shows. If "stealth wealth" is your style, the Phaeton W12 is your kind of find.

2004 Volkswagen Phaeton W12 Quick Facts:

Assembly: Dresden, Germany

On sale (U.S. ): 2004-06

Engine: 6.0L DOHC 48-valve W-12/420 hp @ 6,000 rpm, 406 lb-ft @ 3,000 rpm

Notable features: Air suspension; heated, cooled, ventilated, and massaging seats; powered trunk with Campagnolo-made hinges

Notable modifications on this example: Bluetooth, ride-height programming adjustment, 22-inch Enkei wheels, LED headlights