A three-way car war is at full roar and it could involve more dogfighting than the Battle of Britain.

Oh, in public, Ford, Honda and Toyota are being gentlemanly and personable in their statements that there's more to commerce and customer relations than the vulgarities of buying sales titles and busting competitors' chops.

But in private, with Taurus, Accord and Camry welded in a wrestle to become America's best-selling car, Ford, Honda and Toyota are watching monthly numbers as closely as Paramount watches the weekly box office.

And none more expectantly than Toyota, which is making a major play with its shrewdly upgraded, significantly down-priced 1997 Camry, which is simply an excellent sedan made wonderful.

Honda's Accord, introduced in 1976, was top gun in national sales for almost a decade. Deservedly so. It was a poised, sporty family car with a huge combination of taut, smooth handling and quality assembly that first shoved Detroit into doing something about the under-built wobblers it was half-baking at the time.

Then--was it only 10 years ago?--along came Ford's Taurus. By 1992 this American contender had overtaken the Japanese emigre because by styling, price and performance it was almost as sweet. What Taurus might have lacked in sophistication was overcome by being as American-built as Mike Piazza.

Hovering in the shadows, however, its reputation growing as the entity underwent incessant refinement, was Toyota's Camry.

And uneasy lies the head, Henry IV once grumbled, that wears a crown. Even if you only wear a tiara, Princess Di was once heard to mutter, these are twitchy and precarious times.

Last year, a re-engineered Taurus overdosed on higher prices and lava lamp styling. Sales idled. Accord--although a little pricier but newly armed and equally dangerous with a 170-horsepower V-6 engine--reclaimed ground Taurus had lost. By August it was back in the top drawer.

With Ford currently sweetening the sales pot with customer rebates--while Honda typically avoids such bribes--Taurus has regained a slender lead. But the smart money is silent on who will be best-selling come New Year's Eve.

Meanwhile, on the rail, pushing hard and selling fast at about the same price, the 1996 Camry has moved within hissing range of Taurus and Accord.

It follows that a larger, slicker and very much quicker 1997 model should be able to at least separate the veteran duelists this year. With a crumb of luck, with Toyota dropping Camry prices, from $360 to $1,020 depending on the model, there is a good chance that sometime next year, its sedan will burst ahead, leaving Taurus and Accord to wonder where their titles went.

Toyota has been remarkably canny with Camry.

Slow-selling coupes and wagons have been pared from the line and the car will be sold only as a sedan in just three trim levels. With such refocusing, of course, co mes a reduction in production costs.

Expensive trivia has been exorcised with the power antenna replaced by an in-glass aerial; seat backs that recline without rachety increments and fewer knobs to control the adjustments; a stronger, lighter front bumper and snout redesigned from fewer impact-soaking pieces.

Rather than develop new engines, Toyota has breathed on the Camry's existing and thoroughly acceptable power plants. So the base 2.2-liter four-cylinder now produces 133 horsepower (eight more than last year) while the 3.0 liter V-6 develops 194 horsepower (a bump of six.)

Instead of building a new chassis, Toyota has reconfigured the frame of previous generations and concentrated the fine-tuning on improved ride comfort, better balance and stickier road-holding at higher speeds. The car is longer and wider, the wheelbase has been stretched, and that explains a welcome rear-seat roominess.

Instead of unleashing aggressive stylists--as did Ford with the new Taurus--the clay and foam carvers at Toyota agreed upon conservative, risk-free and evolutionary lines that would not jar our eyeballs.

Chrome windshield trim has been dumped. Doors have single, instead of triple, rubber seals. Front grab handles are gone. Less expensive tires are fitted on less expensive, less frisky models.

All of which has created major savings that Toyota wisely deeds to its Camry faithful. Price of a base, four-cylinder Camry CEsedan is down to $16,818, while the ticket for a sharper imaged XLE with the V-6 is trimmed to $24,438.

But to make sure this fourth-generation Camry is visibly, unquestionably new, the rear deck has been sculptured to keener edges and is almost Bimmer-like. The trunk lid yawns wider, lift over is lower and the glove box has been enlarged for those who might like to add a muffler and mukluks. And radio controls have finally been moved above climate controls which is exactly where God and Rick Dees intended them to be.

On the mechanical front, traction control is available on V-6 models and anti-lock brakes are standard on all but the bargain basement CE. On the road, the Camry is smoother, quieter, with a four-speed automatic that is typically seamless, absolutely fabulous and simply peerless.

Despite this wholesale rearranging of contents and conveniences, the feel and appearance of Camry has not been cheapened. Granted, chassis tuning and suspension tweaks seem to have reduced its athleticism. The ride is softer, the handling even a little mushier as the market position of Camry moves a little further from Lexus and Avalon, and a fraction closer to Corolla and Tercel.

Which also is closer to family days in the neighborhoods of Taurus and Accord.

1997 Toyota Camry XLE

The Good: Subtle reduction of contents, sly reduction of price. Smoother, quieter, larger with improved rear seating and access to trunk. A Taurus- and Accord-fighter to be feared by Ford and Honda.

The Bad: Handling a little softer, and styling may be too low-cal for some.

The Ugly: New Rubbermaid snout draws critics.

Cost Base: $24,438. (Includes destination charge, dual air bags, automatic transmission, anti-lock brakes, air-conditioning, cruise control, power windows and doors, anti-theft system, 15-inch alloy wheels.)

As tested: $28,113 (Adds traction control, power moon roof, six-speaker sound system, leather seats and cargo nets.)

Engine 3.0-liter, 24-valve, twin-cam V-6 developing 194 horsepower.

Type Front-engine, front-drive, five-passenger family sedan.

Performance 0-60 mph, as tested, with four-speed automatic: eight seconds. Top speed, electronically controlled: 130 mph. Fuel consumption, EPA city and highway estimates, 19 and 26 mpg.

Curb Weight 3,100 pounds.