Volkswagen is taking its Passat to a new level by offering it with an eight-cylinder engine, a luxurious interior, all-wheel drive and a $37,900 price tag. The station wagon version lists for $38,700.

The W8 engine was created by bolting two narrow-angle VR6 engines together at the crankshaft, creating a W12. Chop off one cylinder on each bank and you get a W8. The W12 will be used in the upcoming VW Phaeton. To visualize the configuration, hold up four fingers, then spread the middle ones apart. Each finger represents one bank of cylinders.

After a few miles behind the wheel of the W8 Passat, you might think the W stands for Wow. This engine cranks out an impressive 270 horsepower, is delightfully smooth and completely transforms the character of the car. Variable valve timing and 32 valves enable the engine to breathe freely and spread its power across a wide band. Tap the throttle and this engine responds with a welcome surge of power. Hold down the throttle and the W8 is capable of hitting 60 miles per hour in 6.5 seconds. The standard 4Motion all-wheel-drive system provides excellent grip in good or bad weather. The only transmission available at this time is the Tiptronic automatic which has a manual-shift feature. A six-speed manual transmission may be in the offing in the coming year.

While some might be critical of VW for taking the Passat into the near-$40,000 segment, driving the W8 is a pretty persuasive argument that the added power, comfort and grip are worth that kind of money. Standard equipment includes fingertip controls on the steering wheel for the audio system, automatic climate control, heated seats, power sunroof, Monsoon stereo system, trip computer and rear sunshade. In addition, wood veneer trim and leather upholstery contribute to the feeling that this is a baby luxury car. The W8 Passat is quick, quiet and smooth P so much so that it may pull buyers from Audi. VW is counting on that not happening.

VW's 4Motion system drives all four wheels all the time. As slippage occurs at one wheel, torque is transferred to the other wheels with traction. This gives the car balanced handling in nearly any situation, and makes it sensational in bad weather. Anti-lock brakes and the ESP vehicle stability program enhance the traction and stability of the 4Motion system.

Given the W8's performance potential, the suspension is pretty plush. With 16-inch wheels and soft springs, it rides more like a boulevard cruiser than a back-road blaster, which is appropriate given the Passat's clientele. A sports suspension with 17-inch wheels will be offered in the future.

The W8 Passat is just the beginning of the upward expansion of Volkswagen's product lineup. Within the next year the company will introduce its Touareg SUV and the Phaeton ultra-luxury sedan. Buyers who want to move up but stay loyal to Volkswagen will have plenty of room at the top.

The base price of the test car was $37,900. Ad d freight and the sticker price is $38,450.

Four years or 50,000 miles.

Point: The W8 transforms the Passat from a competent family sedan into one with strong performance and a luxury-car feel. The 4Motion system gives it excellent grip in all kinds of weather. The interior has been upgraded with materials befitting a car in this price segment.

Counterpoint: Some may think it is foolish for Volkswagen to build a $38,000 Passat, but the buying public will determine that.

Engine: 4.0-liter, 270-hp 8-cyl.
Transmission: Tiptronic All-wheel drive
Wheelbase: 106.4 inches
Curb weight: 3,907 lbs.
Base price: $37,900
As driven: $38,450
Mpg rating: 18 city, 25 hwy.
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