THE Touareg is at the very top of the Volkswagen Group Australia line-up. It is pitched in a market where the credibility of the badge has nothing to do with luxury, engineering or value.

It is all to do with snob value: if you are spending $70,000-plus on a new SUV wagon, you want it dripping with brand exclusivity that in this country is restricted to marques such as BMW and Mercedes-Benz.

Volkswagen made its name selling humble cars, so it has struggled to get the Touareg a real presence in this segment.

Yet things are finally looking up for the Touareg, with the model line now six years’ old. A price re-alignment in October 2006 and a facelift in August 2007 have meant that sales are up (to the end of May, in year-to-date sales) from 209 in 2007 to 478 sales this year.

Even better, Volkswagen has launched a performance version called the Touareg R50, which has not only given the model line a ‘hero’ variant but has helped kick along sales. Currently the R50 accounts for nearly 20 per cent of Touareg sales, despite the car being hand-built to order only.

The R50 is more than a tarted-up Touareg V10. At $129,990, it adds only $8000 to the price of a V10 but has plenty of bespoke features, not least of which is the more powerful engine.

With turbo and ECU fettling, the R50 has 28kW extra power and 100Nm more torque than the V10. Like the 2007 upgrade, the V10 has the Volkswagen pump-duse injection system but runs a particulate filter to meet current Euro IV pollution regs.

Then there is the rest of the package, dubbed the ‘R Look’. A bodykit and roof spoiler (and blue-painted brake callipers) are key exterior items, as are the massive 10 x 21-inch alloy wheels.

Then there's alloy-finish interior touches and the Driving dynamics package with roll compensation, which like the Cayenne update last year counteracts bodyroll.

When you slip inside the R50 all is familiar Touareg V10, except for the splashes of aluminium where there is usually wood.

While the Touareg is big on the outside, it is not a huge SUV inside. It can feel claustrophobic with the high window sills and the long dashboard and thick pillars.

There are other SUVs like the Range Rover Sport or BMW X5 that offer better accommodation. Perhaps the acreage reserved for door and dash panels might explain the Touareg’s excellent five-star NCAP crash rating.

Certainly the Touareg feels luxurious and has excellent fit and finish inside. With subtle upgrades to the sat-nav and instrument cluster, the R50 Touareg looks classy but still contemporary.

Yet the design quirks that the Touareg has always had continue. You will have to live with steering column-mounted paddle shifters that are fixed in position so you cant use them easily when cornering (and on the test car, the downshift paddle didn’t work!) and the seats look great but are for some just too short and narrow in the base to be comfortable.

The pull release for the foot-operated park brake is like in almost every Touareg (and its related models, the Audi Q7 and Porsche Cayenne) I have driven in that it takes two goes at pulling the release before the handbrake is fully off.

Even though major controls are clear, logical and easy to use, the auxilliary controls can be fiddly, albeit not as awkward as the i-Drive in the BMW X5.

The cargo area is accessed by an electrically operated tailgate that lifts high to present a tidy, squared-off space. The actual volume is acceptable for a young family’s luggage but not exceptional, while if you were expecting a spare wheel you will not find it under the cargo floor.

In fact, there is no spare - instead you re-inflate a punctured tyre with a can of puncture repair fluid.

The Touareg V10 used to be a bit difficult to drive smoothly, with the throttle response and brake feel set up poorly. The performance was great at full-throttle, but hard to employ drive day-to-day, with awkward, primitive pedal response making the learner-driver lurch hard to avoid in traffic.

The R50 is nothing like that while it feels like throttle mapping has it launching too softly with smaller increments of throttle (easing up a steep driveway needs almost half throttle to get it moving, for example), it is a far, far smoother and more subtle transition to more power and the brakes are modulated just perfectly.

And while the massive 21-inch sticky tyres have a lot to do with it, you don’t break traction off the line with full throttle like the standard V10 can.

There is no doubt this car has sledgehammer impact in its acceleration, it's just that the sledgehammer is padded and wrapped in velvet.

When you call on the R50s performance, it comes as a bit of a surprise. Because the initial response is muted, when the 850Nm is eventually placed on the table, it is like it has been sneaked into the room behind you.

Off the mark the front lifts gently at first, the rear squats down and for a half-second your brain is calculating a solid but not particularly inspiring rate of acceleration. But the R50 keeps just getting faster as it flicks through the gears and feels like an Airbus on V-max and preparing for lift-off.

While the R50 launches itself with massive thrust once rolling, the truth is it feels faster than it actually is, with an official 0-100km/h figure of 6.8 seconds (0.4 seconds faster than the standard V10) not really performance car territory. Perhaps the sense of quickness comes from the fact you are moving a not inconsiderable amount of real estate down the road.

The performance does not come at a big cost at the bowser. We saw a consumption figure of 11.5L/100km with easy highway cruising.

While the V10 is quiet, it isn’t always smooth. The slight vibration at idle is not unacceptable, but the vibration that can be felt through the steering wheel at certain rev ranges seems to be an unfortunate V10 characteristic. It is hard to justify in a $130,000 car.

The six-speed Tiptronic auto shifts smoothly and while lower gears can seem a bit too short for the V10, generally it still teams well with the V10 and delivers gearshifts smoothly.

The four-wheel drive transfer case and height-adjustable air suspension provide the R50 with a surprising amount of off-road ability. Those fragile 21-inch tyres won’t grip too well and would puncture in an instant, while the bodykit does not do any favours for the approach, ramp-over and departure angles.

Having said that, the R50 will run rings around some of its competition and in technical off-road ability is not far off the class-leading Range Rover Sport.

The R50 seems to have improved in an area that has been a problem for Touareg - the inability to cope with sharp bumps. Even with the three-mode suspension damping system set to the hardest setting (‘Sport’), the R50 does not transmit as much noise or shocks into the body from the suspension as previous Touaregs tested.

It’s not perfect, though: while long lazy bumps and potholes are absorbed well, the R50 still can thump over the sharp potholes or expansion joints.

The way you can throw this big SUV into corners seems to defy the laws of physics. Given that thought is uppermost in your mind when you’re pushing the R50 though corners, it always feels as though you should leave a thick wedge of safety margin.

The steering lacks feel or precision compared to the benchmark X5, though the V10’s chassis is responsive enough to have fun through the corners.

The Touareg R50 might be a the answer to a question no-one asked in terms of what it can do, and while it is smoother and slightly faster than the twin-turbo BMW X5 3.0sd diesel, it is also about $28,000 more expensive.

Mind you, clothed in its bodykit in the Biscay Blue pearl-effect paint and sitting on its 21-inch wheels, the Touareg R50 certainly looks the part and perhaps that’s all that counts.