I don't know if I would call it a Volkswagen..... They are very well made watches, higher grade steel, in house movements, and almost all COSC certified. They are a step above the ETA-based movements of Omega and Breitling. Personally, for the price of most Rolex models, I like IWC or Blancpain. But there's a place for Rolex in my collection.
Yes, Rolex is overpriced. But you're paying for the name recognition and "prestige". It's the same reason why people pay more for LV, Gucci, Prada, etc etc
I think calling a Rolex a Mercedes is fairly accurate. Some of the Mercedes share the same platform as Chrysler's, so they may not be as "upscale" as they seem and you're paying for the name; much like Rolex. Bentley's are among the upper echelon of cars. Only the Rolex precious metal watches launch them into tens of thousands. All the SS models are less than $10K, just the vintage SS models get a little pricey due to consumer demand.
They're not at the level of Patek Philipe, A Lange & Sohne, Breguet, Audemars Piguet, etc etc