Your comments just reinforce the point: The Phaeton doesn't sell, even though it has the same platform, powertrain, and equipment levels of an Audi A8L, and is thousands cheaper to boot. The reason? Audi has the brand equity that VW doesn't. People will pay thousands more for essentially the same car because it says Audi, not VW.

And don't mistake people buying Jettas and wanting A4s as VW not having a strong customer base. That also reinforces the point; people that can't afford an A4 will buy a Jetta, because it's the next best thing to having what they really want. Very few people on this earth have the means to buy exactly what they want; the vast majority buys the closest thing they can afford. Those people are still making the same decisions based on perceived brand value that the people buying Maybachs and Rolls Royces are. VW has squandered some of their reputation among knowledgeable buyers due to some serious quality issues with the first few years of the A4 platform cars, but there are still plenty of blissfully unaware people who perceive the Jetta/Golf/Passat as being worth paying the premium over an Accord or a Camry.

Subaru indeed does not have cross-branding issues - the Saab 9-2X will most likely be a one-shot deal. That much is true. What you seem to be blissfully ignoring is that mainstream models have everything to do with the viability of flagship products. Why do you think Toyota, Nissan, and Honda have luxury channels? Their mainstream products define them in the marketplace, and an upscale badge is necessary to move upmarket. This is true outside of the US as well - Lexus is set to become Toyota's worldwide flagship brand, and in Japan, the SC430 outsells the visually and mechanically identical Soarer based on brand image and equity, as does the LS430 versus the Celsior.