Like the Porsche Cayenne the Touareg shares its platform with, the V-10 TDI features four-wheel air-adjustable independent suspension. There are six adjustable ride heights; these range from a lowered setting, with 6.3 inches of ground clearance for high-speed operation, to a raised position with 11.8 inches of daylight underneath for clearing off-highway obstacles. Fully raised, the Touareg can ford through 22.8 inches of water. It also is capable of climbing and descending 45-degree slopes. Hill Descent and Climb Assist apply individual brakes to enhance traction and controllability under the most challenging off-road trail conditions.

Despite this off-road ability, the Touareg behaves more like a tall sport sedan than a heavy truck when it comes to gobbling up mile after mile of pavement. The pneumatic suspension delivers solid balance between ride quality and control, while standard ESP stability control and anti-lock vented disc brakes with brake assist give confidence. Continuous Damping Control has three driver-adjustable ride-stiffness settings.

Inside, an exquisite leather, wood, and aluminum-trimmed cabin sets the Touareg apart from the crowd. Featuring appointments that wouldn't be out of place in an Audi A6 or A8, the Touareg's front seats are 12-way power adjustable, heated, fully reclining, and offer lumbar support and driver-seat memory functions. An optional Winter Package adds heated rear seats as well as a ski bag and a heated steering wheel. Safety systems include dual front airbags, front-seat side airbags, and side-curtain airbags for both rows of seats. In the event of airbag deployment, the fuel and electrical supply are turned off and all doors are unlocked. Unlike many of the newer midsize SUVs that feature three rows of seats, the Touareg has accommodations just for five passengers in two rows. Cargo space behind the rear seat is 31 cubic feet, which expands to 71 cubic feet when the seat is folded down.

The appeal of the new Touareg V-10 TDI is its blending of luxury and high performance with compact-SUV fuel efficiency. That outstanding efficiency is a major reason European drivers, faced with $5/gallon fuel prices, have flocked to diesel-powered vehicles for many years. Unfortunately, buyers in California, New York, Massachusetts, Maine, and Vermont will have to wait. Extra-stringent particulate-emissions limits in those states exclude even the cleanest of diesels, probably through 2006. VW is working on a new particulate-trap system that, together with low-sulfur diesel fuel that oil companies will begin refining in 2007, will enable the automaker to offer direct-injection TDI models in all states.