A mere $1305 is all that separates the five-passenger 2011 Volkswagen Touareg from the seven-passenger Audi Q7. So who is really going to purchase a Volkswagen over a similarly priced Audi?

While the VW Group honchos probably aren't too concerned about which vehicle a customer buys-as long as it stays in the family-after driving the new Touareg, we're pretty sure it can stand its ground against the premium SUV competition, up to and including its Q7 and Porsche Cayenne group-mates.

In FSI V-6, TDI diesel, or hybrid forms, the Touareg is Volkswagen's U.S. flagship model, pushing the automaker higher into luxury territory as the new Jetta and upcoming New Midsize Sedan get cheaper for the U.S. market. The sizable price gap between a loaded Tiguan and base Touareg force us to further question Volkswagen's pursuit of the midsize luxury crossover market.

The Touareg's serious weight loss will help it compete, but at 4711 pounds for the FSI V-6 model, it is still a hefty vehicle. It shows in the sturdy way it drives. Volkswagen's new eight-speed automatic transmission is standard on all three models, contributing to impressive fuel economy gains. The double control-arm suspension uses aluminum, also aiding efficiency.

No longer does the Touareg lag behind the segment leaders in fuel economy. The FSI V-6 model achieves 16/23 mpg city/highway, while the TDI's 19/28 mpg rating boosts it slightly above the diesel offerings on the 2011 Mercedes-Benz ML and BMW X5. The limited-availability Touareg Hybrid is expected to be rated 21/25 mpg -- not bad for a 380-horsepower, 5135-pound all-wheel-drive SUV.

Neither is the interior, which lives up to Volkswagen's reputation-excepting the U.S.-spec Jetta, of course. Aside from oddly placed side mirror adjustment controls, the Touareg's interior isn't difficult to use and is quite attractive, especially with the optional wood trim complementing the silver trim. The exterior is sufficiently upscale as well, though subdued. The 2011 Touaregs don't look dramatically different from the outgoing model, but the new SUV's LED daytime running lights and Mazda6-like chrome exhaust pipes distinguish the two VWs.