THE challenge is on. The gauntlet laid down. Subaru's new Legacy and Outback are now aimed unashamedly at beating prestige European makes.

To show they mean business, the Legacy range starts at an identical £15,750 on-the-road price as its predecessor, while other new models have savings of up to £1,250 shaved off the prices.

Actually, the challenge laid down by Subaru is not new. They have said it before, but this time they really do mean it. Models on sale this month do offer smoothed-out exterior styling, greatly improved interior presentation, a more powerful top-of-the-range engine and even more precise handling.

Its all-wheel driving dynamics are even more involving than ever, with the engines and transmissions lowered and chassis and steering thoroughly revised to provide exciting ride and handling.

Subaru may not be the class of the field when it comes to premium badge recognition, but few can match it for prices for cars with such poise and traction.

Take the top-rated 3.0R, whether the Legacy saloon, sports tourer estate or the Outback, with prices of between mid-£20,000 to £30,000, these models beat similarly priced European saloons and estates hands-down for handling, poise and traction, and proved especially exhilarating on the winding roads of Northumberland and Yorkshire, where the cars were unveiled to the European motoring press.

The new three-litre flat-six engine, a seriously uprated version of the H6-3.0 engine introduced in the previous Outback range, has seen a change of pistons and crankshaft, a revised exhaust system and a fitted active valve control plus variable valve lift. The result is a substantial 35bhp boost in power output and an extra 11lb/ft of torque. That means 241bhp and 219lb/ft of torque at 4200rpm, and you can certainly feel the difference in lift-off and rolling acceleration. Top speeds are top heavy, too.

These performance all-wheel drive flagships have a new five-speed automatic transmission with sequential manual selection as well, and the whole package is intended as a tempting trade-up for Impreza WRX (world rally car legal road-going versions) owners looking for a little more space as well as drive comfort.

The 2.0-litre and 2.5-litre models also have been given a power boost, now 138PS and 165PS respectively.

The Legacy 2.5i automatic saloon is 7.1mpg better on the extra urban fuel cycle at 46.3mpg. Equally impressive is the Legacy 2.0i manual sports tourer which records 36.7mpg on the combined cycle, up by 5.7mpg.

Exhaust gases have been reduced, too, spectacularly as it turns out, meaning big savings for company car drivers. Compared with the earlier car, the tourer is rated at 20 per cent, seven per cent down. In fact some Legacys have lower penalties than diesel-powered competitors such as the Volkswagen Passat fitted with a 1.9-litre engine.

Subaru designers have also been able to provide new cars with better aerodynamics as well as a weight reduction of around 55kg, both of which help make the cars so much more economical.

Safety features include front head-restrains which reduce whiplash injuries during violent braking or rear-end shunts, dual-mode front airbags which inflate according to the severity of the accident and brake and clutch pedals which snap away under impact so protecting the driver's legs from being trapped and severely injured.

All Legacy and Outback models have side airbags large enough to protect the head and chest. Curtain airbags are also standard on some models and available as an optional extra on others.

The three-litre models are fitted as standard with a vehicle dynamics control system which, as Subaru says, can detect side-slip and sudden swerves.

While all the models outside have been given a slightly curvier yet chunkier look, inside the emphasis is on quality. Subaru's designers have introduced what they call Surprise And Delight interiors.

The big surprise is the amount of room for such a low-slung sporty machine. There is more cabin room, an extra nine millimetres of shoulder room, 11mm of elbow room and front seats which slide three millimetres forward and 7.5mm more rearward. In addition, the entire driver's seat can be lifted 40mm and the steering wheel (slightly smaller than in earlier models) has tilt adjustment.

Delight has to be with the extensive colour-matching interior, with fascia, door trim, roof lining and grab handles all made with new materials and with extra padding for safety.

Every new model has good equipment levels, including self-levelling rear suspension and a rear limited-slip differential for the Outbacks.

All models, including the entry-level Legacy 2.0i, have all-wheel drive with anti-lock brakes and electronic brakeforce distribution, climate control air-conditioning, alloy wheels, radio/CD players, electric windows and remote central-locking with alarm and immobiliser.

The Legacy 2.5i-litre SE model, priced from £19,750 and Outback SE (from £22,500) have heated front seats, door mirrors and windscreen de-icer, powered sun-roof, cruise control and an eight-way electrically-operated driver's seat.

The range-topping Legacy and Outback 3.0R models also carry six-stacker CD system, leather-wrapped steering wheel with audio controls and eight-way electrically adjustable front seats.

The Legacy saloon line-up features seven models, from the 2.0i-litre manual at £15,750 to the 3.0Rn (n for satellite navigation system) automatic at £25,750; the Legacy Sports Tourer, or estate, line-up also numbers seven, from £16,750 to £26,750; while the Outback line-up of four models ranges from the 2.5i-litre manual at £20,000 to the 3.0Rn-automatic at £28,000.

Updated: 12:23 Friday, November 21, 2003