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Small luxury cars have always fascinated me. Back in the 1960s, before I even learned to drive, the first small car boom hit on these shores. Detroit responded with "compacts" that were devoid of most of the comfort and convenience goodies associated with true luxury rigs. My dad, who was a Pontiac dealer, wearily explained to me that people who wanted luxury bought big cars, and people who bought small cars wanted economy, so there was no point in offering a truly luxurious small car. I didn't buy it, but that was to be Detroit's attitude for many years.

The oil crisis of the mid-1970s changed that. Cars had to become a lot more fuel efficient in a hurry, and that meant downsizing. Even for luxury cars. The Ford Granada and Mercury Monarch launched in 1975 were the first compact luxury cars, and they were a big hit. The Cadillac Seville followed a few months later to an equally rapturous response and the industry never looked back.

Then, in the 1980s, came the Korean invasion. At first that meant Hyundai, but other Korean brands have followed. Hyundai is still the most successful of the lot, though, and got that way building cheap cars, cars that due to lower labor costs in Korean, could undercut the Japanese — who were already eating Detroit's lunch by undercutting American cars. This forced the Japanese to move upscale and leave the dirt-cheap, entry-level market to the Koreans. Hyundai didn't mind, but for many years the brand was synonymous with inexpensive transportation of, frankly, dubious quality. Everyone knows that you can have it cheap or you can have it good, but you can't have it cheap and good at the same time. Right?

Not any more. Slowly throughout the 1990s Hyundai worked to improve its quality so that today it can afford to offer the best warranty in the industry: 10 years or 100,000 miles. They couldn't afford to do that if their reliability and durability weren't right up there with the best. They haven't forgotten their niche, though, which is still building relatively inexpensive cars. Now, however, they've been expanding into more and more market segments. The small luxury sedan segment was an attractive target and the XG350 was the result.

We recently tested a 2004 model XG350, which was introduced in July, 2003. It is revised and even more refined this year. Some of the changes are easy to see; the 2004 edition has been restyled with a new grille, new headlight design, a new front bumper and a new front air dam with projection fog lamps. The new front end with a horizontal design airdam gives the XG a wider, more stable aspect and the projection fog lights give the front end a more sophisticated look.

Along the side the waistline molding is wider and at the rear there is a new decklid, new rear bumper, new taillight design and even the CHMSL (Center High Mount Stop Lamp) is new, using a bright LED light in place of the previous bulb-type light. The license plate has been moved from the rear bumper up to an inset in the decklid, giving the XG a taller, more stately appearance. (Stately in a Korean car? Who'd of thunk it.)

Slipping inside the luxurious cabin, the driver and passengers find standard leather seating and some minor refinements such as lighter color woodgrain trim with a new pattern. In a Hyundai. Other refinements for the interior include a revised hood release lever, a redesigned tilt steering lever and the child seat tether anchors in the parcel shelf are now covered when not in use. Gas-operated lifters for the rear decklid make it easier to open.

Other refinements include a redesigned cruise control pod with ribs between the button to improve the "feel" of the switch and a new trunk pull-down handle. For 2004 even small trim details have been upgraded. For example, the lower tray of the front center armrest, which was uncovered plastic last year, has been leather-wrapped for the 2004 model year. Upgrades like these show true attention to detail.

The Hyundai value story continues with new standard features for the 2004 XG350 including: rear reading lights mounted in the C-pillars, Electrochromic rearview mirror and the versatile HomeLink system.

When the XG sedan was introduced three years ago, Hyundai asked U.S. car buyers a question. Would they spend nearly $25,000 for a Hyundai vehicle? The question should have been: Would U.S. car buyers pay $25,000 for a small luxury sedan similar to those certain European manufacturers are offering for $30-35,000? Whatever the question, the answer was resoundingly positive and sales of the XG have exceeded the company's expectations.

Two trim levels are offered: XG350 and XG350L

The XG350 offers buyers a list of standard featuresthat includes: five-speed automatic transmission with Shiftronic manual control, four-wheel disc brakes with ABS and traction control, dual front airbags and front seat side-impact airbags, leather seating surfaces, fully automatic temperature control, 16-inch alloy wheels fitted with Michelin tires, cruise control, keyless entry with alarm, projector beam headlamps, trip computer and much more.

The XG350 is powered by a, high-torque 3.5-liter V6 engine. It is a double overhead cam design and develops 194 horsepower at 5,500 RPM and 216 foot-pounds of torque at 3,500 RPM. The engine is mounted transversely and has a variable intake system and anti-vibration balance shaft.

The XG350 features Hyundai's five-speed dual-gate Shiftronic automatic transmission with manual shift override. The Shiftronic transmission provides automatic or manual gear selection, allowing the driver to manually shift up or down the transmission range. The transmission is also fully adaptive, adjusting to the individual driving techniques of each driver.

The XG350 suspension features independent double wishbones in the front with an anti-roll bar. The rear features a multi-link suspension with dynamic toe control and anti-roll bar. Nitrogen gas-filled shocks are used at all four wheels. The front shock absorbers have special low-velocity control valving to provide excellent high-speed ride control while still delivering a smooth ride.

Every 2004 model XG350 is equipped with Electronic Brake Force Distribution (EBD) that is designed to enhance braking control. The EBD is a sub-system of the standard ABS system that eliminates the standard front/rear proportioning valve and uses instead precision sensors and electronics already installed as part of the ABS system. The EBD is designed to increase the performance of the rear brakes by delivering ideal brake force distribution to the rear wheels as well as adjust brake proportioning based on vehicle load or weight. The EBD is controlled by the ABS Control Module which calculates the slip ratio of each wheel at all times and maximizes brake pressure to the rear wheels, but never lets it exceed the pressure to the front wheels.

The top-of-the-line XG350L includes all the standard features of the XG350 and adds new design 12-spoke alloy wheels, Premium Infinity speakers and 210-watt external amplifier, a power tilt/sliding moonroof, leather-wrapped steering wheel rim with woodgrain inserts and memory driver's seat. In addition, both the front seats (driver and passenger) are heated. The exterior mirrors have a memory function and an automatic tilt-down feature when the gear selector is put into reverse.

It's a wonderful car and you can't beat it for the money. If we were in market for a small luxury sedan, the Hyundai XG350 would be it. R&D