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DUESSELDORF -- In a move that has flabbergasted the German advertising industry, Volkswagen has chosen an independent Hamburg agency employing a mere 48 people to guide its entry into the upper-luxury end of the car market to compete against the likes of the Mercedes-Benz S-class.

Hamburg-based Grabarz & Partner has beaten some of the biggest and best global networks in the industry to the task of launching the D1, a luxury brand that joins the Volkswagen stable which houses the entry-level Czech brand Skoda, mass market VW and upscale Audi brands.

With the autumn launch of the D1, rides Volkswagen Chairman Ferdinand Piech's dream of pushing the VW brand upmarket.

In addition to the D1, Grabarz will handle the launch of a more upmarket version of the Passat called the Passat W8, which is equipped with a large, eight-cylinder, 3.7-liter engine. The engine's cylinders are configured in a compact "W" formation allowing such a large engine to fit into the Passat's existing engine bay.

The D1 and Passat W8 pitch lasted three months. Initially, the Wolfsburg-based consultancy Hoevel Communications selected a number of agencies for VW to consider. They included DDB Worldwide, Berlin; Boston-based Arnold Worldwide in a joint bid with its German agency Rempen & Partner; Leagas Delaney, Hamburg; Grabarz; Weber Hodel Schmid, Zurich; Grey Worldwide, Duesseldorf; Xynias Wetzel v. Bueren, Munich; and Munich-based Start jointly with Grey Worldwide.

There were a number of strong contenders for the D1 launch. DDB handles the $170 million VW account in the German market, Weber Hodel Schmid had handled the European launch of DaimlerChrysler's Smart car; Grey handles Skoda in many European countries and Boston-based Arnold Communications holds the VW account in the U.S.

It's thought that four finalist were presented to the Volkswagen Board on Tursday: DDB, Arnold/Rempen & Partner, Leagas Delaney and Grabarz.

Some agency insider fear Grabarz's appointment is a big blow to DDB, Berlin, but not all share this view.

"There is no fear for DDB that Grabarz may grab the fat Volkswagen budget," an agency boss commented. Grabarz & Partner has kept a low profile here. The agency opened its doors in 1993 and now ranks 85 with a gross income of $ 2.5 million. Its main clients include IKEA Germany, two Gruner & Jahr titles and Deutsche Eisenbahn insurance.

"We are more than extremely happy," agency founder Andreas Grabarz says of the win. -- Dagmar Mussey

Copyright April 2001, Crain Communications Inc.

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