Sports cars are fun to drive but don't have room for more than two people.

Sedans hold more than two people (plus two bags of golf clubs or enough luggage for a week's vacation) but often aren't all that much fun to drive.

Smack in the middle of these two automotive paradigms sits the sports sedan, which offers sports-car performance and family-sedan practicality.

While sports sedans come in various guises, most tend to be more expensive than their more mundane brethren; the real gems, luxury sports sedans, are found where the air is thin and the prices high--at the top of the heap.

Key players here are the BMW 540i and Mercedes-Benz E420 Sport, German road rockets that blend wood-and-leather luxury with tire-searing performance and the ability to cruise at triple digit speeds for hours on end, should you live in Montana or have a private track at your disposal. You have at your command a level of performance that leaves your knees weak and your wallet significantly lighter from shelling out approximately $50K.

BMW's 528i is the same basic car with a 190-horse, 2.8-liter six cylinder, and although its performance is not on the same level, its base price of $37,900 is decidedly more reasonable.

While the vast majority of us can't afford to play in this league, these cars are worth a look because of the excellence they embody. We spent some time with the Mercedes last fall, and now comes the BMW 540i.

Powered by a 282-horsepower V8 that zips to 60 mph in 6.6 seconds with a five-speed automatic transmission, this four-passenger missile from Munich was redesigned last year. Under its lean and lithe body sits a fully independent aluminum suspension and four-wheel disc brakes (with anti-lock). Although its suspension is tuned to provide excellent road holding at high speeds, the 540i does not have the kind of tooth-rattling ride often found in high-performance vehicles.

Consequently, it feels just as much at home on the boulevard as it does on back roads. If anything, its ultimate handling may suffer slightly from the compliant ride, but that's fairly academic because it isn't likely you'll get close to its limits on public thoroughfares.

The traction control system also has a unique cornering stabilization feature that helps stabilize the vehicle should the driver apply the brakes in a turn.

The 4.4-liter, dual-overhead camshaft (DOHC) engine has two distinct sides to its personality. Driven moderately, it feels docile and smooth; put the throttle down, however, and a muted howl rises up from deep within as the scenery rushes past your window. At slow speeds, the five-speed automatic transmission shifts as slick as Crisco; accelerate fiercely and each shift is accompanied by a slight pause to lessen the shock of changing gears under load.

This engine does not need a tuneup before 100,000 miles, and BMW offers all routine maintenance free for the first 36,000 miles.

For those who want even stronger performance, a six-speed manual is offered, and it comes with 17-inch wheels for even sharper handling.

This engine is also used in the bigger 740i, so it is easily capable of handling a bigger car.

Inside, BMW continues its tradition of functional design, good taste and creature comforts. The plush leather interior has wooden trim, front and side airbags and a concert-quality sound system. The instruments are models of readability.

My only gripe about the interior design is with the overly complicated stereo controls and its numerous tiny buttons. The power window buttons have been moved to the doors, but the lock button remains on the console.

The steering wheel has fingertip controls for the audio system and cruise control, but they are so cryptically marked that they are difficult to figure out.

The 10-way power front bucket seats are soft and supportive, a difficult combination to achieve. I was surprised heated sea are not standard equipment considering the list price.

Hard-core enthusiasts may well prefer the sports seats that are a no-charge option on cars specified with the manual transmission.

There is room for three in back, and our test car was equipped with the split-folding rear seat that adds versatility when it comes to hauling cargo.

Price

The base price for our test car was $49,900. Options of fold-down rear seat and premium stereo brought the sticker price to $52,545, including freight.

Warranty

The basic warranty is for four years or 50,000 miles.

Vehicles for The Star's week-long test drives are supplied by the auto manufacturers.

Point: The 540i offers sports-car acceleration and luxury-car amenities in a package that is slim, trim and aerodynamic.

Its prodigious performance comes at quite a price, to be sure, but surrounding oneself with luxury is rarely inexpensive.

Counterpoint: There are only a couple of things to quibble about: complicated stereo controls, lack of standard heated seats and cryptic marking for the steering-wheel-mounted auxiliary controls.

SPECIFICATIONS:

ENGINE: 4.4-liter, V8

TRANSMISSION: automatic

WHEELBASE: 111.4 inches

CURB WEIGHT: 3,748 lbs.

BASE PRICE: $49,900

PRICE AS DRIVEN: $52,545

MPG RATING: 18 city, 24 hwy.