The sedan, designed as the most luxurious and expensive VW-brand car ever, was known internally during development as the D1.
VW says "Phaeton" is derived from Greek mythology and translates to "the shining one."
VW revealed the name at a ceremony on Tuesday, Dec. 11, marking the beginning of production at a new assembly plant in the eastern German city of Dresden.
VW has been nudging its way into BMW and Mercedes-Benz territory as it continues to push its Passat sedan further upscale. But the Phaeton will be in a class in which no VW brand vehicle has been before.
The Phaeton will make its public debut in March at the Geneva auto show. It will cost at least $45,000 when it arrives in the United States in 2003.
The Dresden plant's 800 employees will assemble the Phaeton with a 12-cylinder gasoline engine, as well as 10-cylinder and 6-cylinder engines.
VW has invested $166 million in the plant, which will produce about 37,500 vehicles a year.