Volkswagen takes aim at Mercedes and BMW

The people's car maker wants to attract those at the top end of town.

Volkswagen is openly targeting the Mercedes-Benz C-Class and BMW 3-Series, two of the most popular luxury cars, with its new flagship passenger car, the Arteon.

The production version of the Arteon is set to be unveiled at next week's 2017 Geneva motor show, two years after the Sport GTE Concept gave the first look at how the new 'four-door coupe' will look.

The Arteon is the replacement for the Volkswagen CC, which evolved from the Passat CC as a swoopy-roofed version of the brand's mid-size sedan.

It will become the brand's flagship for both technology and styling and will be positioned above the current Passat range, which is topped by the $57,990 Passat 206TSI. That means the Arteon is likely to be priced well above $60,000 putting it in direct competition with the C-Class and 3-Series.

But Volkswagen Australia's head of  product marketing, Jeff Shafer, is unconcerned about go head-to-head with the premium brands. A single, highly equipped model will be offered, debuting technology currently not offered in any Australian VW product.

"We'll be positioning it as our flagship passenger vehicle," Shafer said. "It will be very, very well specced and will sit at the top of our passenger range. At that kind of level we think it will offer a really compelling case against products from Mercedes and BMW."

Volkswagen released this Arteon sketch ahead of its unveiling in Geneva. Picture: Supplied

Volkswagen previously considered a direct rival to the German luxury brands, the full-size Phaeton sedan. But it was ruled out as being too expensive to compete in the Australian market.

While Shafer admits there is a cap as to how much buyers are willing to spend on a Volkswagen, he is confident the Arteon won't push that.

"There's always a limit," he explained. "I don't think we're getting close to that with that model. From the Passat data you can see people are buying the 206TSI variants which are just short of $60,000, which says to me there is definitely potential to sell at that top end of the range. It seems to me that people are voting with their wallets, in terms of equipping their cars quite well. Arteon will have a good value proposition but it will be at the upper end and have lots of features."

The Arteon is due to arrive in Australian showrooms in October.

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