VOLKSWAGEN is entering the upper echelons of the executive car market, with prices of up to almost £70,000 for its new Phaeton saloon.

It costs from about £42,900 in 3.2-litre V6 form, rising to £68,260 for the hugely powerful six-litre 12-cylinder flagship version. Each comes with a high level of equipment and many options, including air suspension, electronic stabilisation programme, electric seats, xenon headlights, draught-free four-zone climate control, leather upholstery, rain-sensor wipers, a six-disc CD player and a seven-inch colour display screen linked to audio, television, satellite navigation, heating and ventilation, on-board computer and telephone all of which is placed under the cover-all name of infotainment centre.

The 3.2-litre V6 engine produces 241 PS, while the 6.0-litre W12, which comes with four-wheel drive as standard, has a maximum output of 420PS. In due course, a 310PS 4.2-litre V8 petrol model will join the range, along with the 5.0-litre V10 TDI, which is the world's most powerful passenger diesel car to date, with 313PS and peak torque of 553lbs.ft.

A long wheelbase version will be added, and there is also expected to be a 3.0-litre V6 TDI. Five seats are fitted as standard, while four-seat packs, which come with a range of extra equipment, are optional. As is the case with BMW and other prestige rivals, Phaeton buyers are able to buy a three-year/60,000 mile inclusive servicing package for £500.

With this option, all scheduled servicing and maintenance costs are covered under the scheme. In addition, all Phaeton owners automatically receive a one-year membership of a concierge service that can do anything from booking last-minute concert tickets or a weekend away at a hotel, to arranging tables at exclusive restaurants.

Diving headlong into the upper echelons of the luxury limousine market is no easy task, especially when your reputation is primarily as a provider of motor vehicles for the masses.

The Phaeton aims to change that, hopefully by emulating the success that Toyota enjoyed when it launched its luxury Lexus brand here to great critical acclaim.

Phaeton is a similarly understated offering, which its critics will say looks like little more than a stretched Passat. Of course the same can be said of BMW's 7 Series in relation to the Five, and of a Mercedes S-Class in comparison to the C-Class or E-Class.

Although the company has gone to the expense of producing the car in right-hand drive form, the UK is expected to account for a maximum of 400 buyers a year at most, giving it unrivalled exclusivity. Only about 40 Volkswagen dealerships will sell the Phaeton, each with its own luxury car manager, specialised workshop and licensed technician.

The United Kingdom launch was held in a stockbroker belt area of West Sussex where the competition on road can be said to be pretty tough. Although in true Volkswagen tradition, the standard of engineering and manufacture are flawless on the Phaeton, the same applies equally to the BMW 7-Series, Mercedes S-Class, Lexus LS430, Audi A8 and the new Jaguar XJ saloons of which there seemed to be quite a few around. While the Phaeton is undeniably a class act, and will certainly do no harm to the company's image, it faces formidable opposition from established brands.

It is likely to appeal to those in search of the ultimate in understated luxury, which to the uninitiated is by no means apparent just by looking at the car from the outside. To some potential purchasers, that is its attraction.

The test cars available included the 6.0-litre W12 4Motion with tiptronic transmission with a basic on-the-road price of £68,260 with an added factory-fit option of myrtle wood trim for £245 and satellite navigation for another £1,775.

Standard equipment is mind-blowing: anti-lock braking, hydraulic brake assist, electronic stabilisation, electronic differential lock, anti-slip regulation and engine overrun torque control (most of which will mean absolutely nothing to the back-seat passenger, whether well-heeled company executive or landed gentry).

Nonetheless, together with airbags all-round, crash sensors, automatic door unlocking in the event of a collision, and door-side protection, the occupants can sit back reading their Financial Times safe in the knowledge that whatever might happen they should be safe.

For the driver and front passenger there are electric seats with 18-way adjustment including lumbar support (with memory), heated too, and also with a massage function (as on the Merc), and for the driver a height and reach-adjustable steering wheel, also fitted with fingertip controls for the infotainment system.

The ride performance of the Phaeton is blissfully quiet and very, very comfortable, helped by the air suspension, self-levelling system, speed-sensitive height adjustment, as well as a choice of four suspension settings from floating comfort through to a firmer sport model.

People who are going to buy this car are not going to be bothered about economy, but for those who want to know, riding around York will soak up11.8mpg, and around 25.9 further out and about, producing a combined figure of 18.1mpg. Emission figure is 374g/km (Euro Four), while the insurance group is 20.

The less powerful 3.2 V6, also with tiptronic, returns 16.4mpg around town, while once on the open road expect around 30mpg. The combined figure is 23.2mpg. Emission figure is 293g/km and the insurance grouping 16.

Although the V6 3.2-litre is less powerful, it still provides excellent ride and performance.

Finally, on top of the comprehensive standard specification - and for those with a deep purse, there are factory-fit options such as the keyless entry and press-button start, automatic distance control and 12-speaker audio system.

Updated: 10:50 Friday, May 30, 2003