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For this review, we were able to test two E500s, a sedan and a wagon, both equipped with Mercedes' 4Matic all-wheel-drive system. The sedan, which is the vehicle we tested first, was similar in most respects to the wagon. In fact, there was very little difference in ride, handling, or equipment between the two. The wagon had more cargo capacity, as you would expect, but otherwise the cars were twins.

What is interesting about the 500E 4Matic is the decision to put Mercedes' potent 5.0-liter, 24-valve, aluminum V8 in a mid-size platform. The result, not surprisingly, is a rocket ship of a vehicle. The addition of all-wheel-drive adds greatly-improved road-holding to the brew.

The E500's 5.0-liter V8 pumps out 302 horsepower and 339 lb-ft of torque. A five-speed automatic transmission is fitted. Engine and transmission are well mated, and performance is excellent in all ranges. In addition to expected premium features like stability control and side airbags, the E500 boasts electronic braking. With electronic braking, the brake pedal works with an array of sensors and a computer that tells four fast-acting valves precisely how hard to apply the brakes on each wheel. With split-second accuracy, the system can change brake pressure on each wheel over uneven surfaces, and can even increase brake pressure on the outside wheels when braking in turns.

The passenger cabin features a two-tone dash with wood accents and first-grade materials. The E500 features standard four-zone climate control that allows different temperature settings for the rear outboard passengers as well as the driver and front passenger.

Of course, features such as a power-tilt and telescoping steering wheel, power windows with one-touch up/down operation and auto-dimming mirrors are standard. A power flip-down pane in the center console opens to reveal the optional six-disc CD changer.

The standard COMAND display on our test car came with the Harmon Kardon sound system. We've heard better in-car sound systems before, but not by much. The Harmon Kardon Logic 7 system features 420 watts of total output, which is fed through no less than twelve speakers.

We came away from our E500 4Matic road tests with a question and a reservation. The question involves fuel economy. While it is certainly true that no one buys one of these rigs for the gas mileage, we cannot understand why the E-Class sedan actually does worse than the larger, heavier S-Class sedan with the same engine. The highway rating for the latter was 22 mpg, compared to only 20 mpg for the E-Class. Our reservation has to do with price. The sticker on our E-Class sedan was $65,110. That's a lot of money and especially so considering the competition in that market segment. Nearly all the cars in direct competition with the E500 4Matic are larger or cheaper or both. In sum, the E500 4Matic is a very good car, but you do pay a premium for that three-pointed star. R&D