Volkswagen is planning to take on the new BMW 5 Series with a new premium model that will slot in above the Passat and below the Phaeton.

German manufacturer Volkswagen is planning to take on the new BMW 5 Series with a new premium model that will slot in above the Passat and below the Phaeton.

A Volkswagen source told that the new model is known internally as the C1. It is likely to be the first car based on VW’s modular C platform. "We have seen definitive design proposals," the source said.

He said the C1 project was recently given the green light. "Three months ago, it was not so certain. But it has been set for 2006 in our planning, so you may assume it is definite now. You will get an impression of it when you see the next-generation Passat, which is due in 2004,” said the source.

An analyst told that the new model was a good move. "Although the model is successful, the overall Passat segment is going nowhere in Europe," said Colin Couchman, senior analyst at Global Insight. "So a premium model would be a sensible addition for VW."

The newspaper pointed out that sales of the Phaeton have been low, with only 2 128 units sold for the first six months of the year, and only 453 sales in June. "Maybe such a premium model (the C1) could eventually succeed the Phaeton, which VW may let die slowly," said Couchman.

Is this a good move?