That's all, Volks!

It seems Volkswagen is determined to move away from its tradition of building "the people's car" and instead build "the bosses' car". Reports claim the German marque is planning a challenger to the BMW 5-series, positioned between the Passat and its flagship Phaeton.

According to reports in Automotive News Europe, the new car will be aiming for a 2006 launch, and closely based on the new Passat due out next year.

However, the Phaeton has hardly been tearing up the tarmac in terms of sales so far and the decision may cause further annoyance at sister brand Audi, where its A6 is currently the medium-luxury entrant.

Sales so far this year across Europe for the luxury Phaeton were just 2,128, compared to 8,387 for the BMW 7-series, 5,812 for Audi's A8 and a whopping 97,708 for the king of the luxury executive market, the Mercedes E-Class.

However, the doubts that surrounded the introduction of the Phaeton seem to have evaporated by the time VW's upmarket SUV, the Toureag, was launched. The Wolfsburg-based marque will be hoping the new car, currently codenamed C1, will be equally accepted.

VW reported a fall in net profits for the second quarter of this year, down 49 per cent to €394 million.

Meanwhile the car firm has confirmed details of its new Golf, the most successful German car of all time.

Very much in keeping with what was revealed in Motors last April, the new car is the fifth model generation of the hatchback and will be officially revealed at the Frankfurt show next month, with a European press launch in the first week of October.

The new car is longer, wider and higher than its predecessor, but not exactly revolutionary in its design changes.

It does feature new front end styling, with twin circular headlights and "Phaeton-style" indicators and VW defends the conservative design by stating that one of the secrets of its worldwide success - more than 22 million Golfs have so far been sold - is that when it produced a direct successor to the Beetle, it created an "original" that resists imitation.

Their new Golf will be launched with four power units: 1.4-litre 75 bhp and a 1.6-litre FSI petrol and a 105 bhp and 140 bhp 2-litre diesel. Four other engines will be introduced later in its lifecycle.