DRESDEN -- Volkswagen AG is pinning its hopes on the booming Chinese market to boost sales of its Phaeton luxury sedan.
The Phaeton has not been the success VW hoped when it launched the flagship model in 2003.
Last year, a little more than 4,000 units were produced at the Phaeton factory in Dresden, Germany, which has an annual capacity for 26,000 units. The showcase plant was opened in 2002 to build the car.
VW pulled the Phaeton from the U.S. market in 2006 due to slow sales.
Frank Loeschmann, director of the Dresden factory, is looking ahead with optimism despite the discouraging figures.
"The Phaeton will definitely have a successor," he said.
VW is aiming for sales of about 2,500 Phaetons in China, Winfried Vahland, VW's China chief said last November.
"The Chinese are considered to be customers who are very critical and interested in technology," Loeschmann said. "That's why we make certain that we are using the best materials and the most current innovations."
The Phaeton is so important to VW in China that the model has its own showrooms.
The Phaeton's 12-cylinder engine is the best-selling powertrain in its class. The engine also is available in the Phaeton's sister models, the Bentley Continental and the Audi A8.
If VW hadn't written off its investments in the Dresden factory and the Phaeton long ago, the sedan would have been a financial disaster.
But the car plays an important role in VW brand's overall product lineup. "A serious manufacturer also has to serve the luxury market," a VW spokesman said.
VW built the Dresden plant as a showcase for its flagship. It is known as the Transparent Factory because its walls are made almost entirely of glass.
Loeschman said Volkswagen sees its investment in the Dresden facility as a long-term project.
VW wants to overtake Toyota Motor Corp. as the world's largest auto manufacturer by 2018. Loeschmann said the Dresden plant will play a major role in Strategy 2018.
"We have staying power, we are convinced we will succeed. The Phaeton's spill-over effect on the entire brand can already be seen today."