Volkswagen will launch its most luxurious - and expensive - model ever at the 2005 Melbourne show, when the Phaeton limousine goes on sale here following its local debut at Sydney 04. One V8 model will be available (meaning no V6 or W12) to rival the Benz S350 and BMW 735i at around $175,000.

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An all-new A-class is due on sale here in early 2005. Debuting at the 2004 Paris motor show, the 2005 A-class will be available with three or five doors, a choice of 1.5-litre or 2.0-litre petrol engines and possibly a 1.7-litre turbo-diesel. It will rival BMW's new 1 Series, priced from around $35,000.

read more about the Mercedes-Benz A-class