The Outback started life in 1996 as a tarted-up version of the pedestrian Legacy wagon. Aiming to take a chunk of the lucrative SUV segment, Subaru took their humble wagon and jacked it up a couple of inches, added scads of plastic body cladding, and voila! Instant quasi-SUV.

But this is 2005, and with the new Outback, Subaru is making no bones about re-establishing its position as a premium alternative to mainstream Japanese cars and SUVs. While it’s still essentially a jacked-up Legacy wagon, the company has gone to great lengths to give the Outback smoother styling along with its own personality.

This year, folks who like the smooth power delivery of the six have the choice between the well-equipped 3.0R and the luxuriously outfitted 3.0R VDC. The price of entry into six-cylinder Outbacks is down $1,000 to $38,995. The four-cylinder 2.5i starts the bidding at $32,995 ($1,000 more than last year), and new this year, the turbocharged 2.5 XT version is also available for those looking for a little spice in their family hauler.

Click image to enlarge

My test example was a 3.0R model equipped with such standard amenities as 17-inch wheels and tires; automatic dual-zone climate control; front, side, and head curtain airbags; engine immobilizer system; heated power seats; and a whole bunch more. It does without luxury trimmings like the sunroof and leather seats found in the VDC model, but this also lops about $6,000 off the VDC’s sticker price.

The 3.0R’s engine - which is not available on the Legacy - is a flat-six configuration, a layout shared with Porsche’s 911. This “boxer”-type engine sits lower under the hood than an inline or vee-type engine because its pistons reciprocate horizontally, rather than vertically or at an angle, thus taking up less space.

Displacing - big surprise - 3.0 litres, the all-aluminum unit generates 250 hp at 6,600 rpm and 219 lb-ft of torque at 4,200 rpm.

While a five-speed manual is available on Outback 2.5i and 2.5XT models, 3.0R and 3.0R VDC make do with a five-speed automatic unit that proved to be unexpectedly and refreshingly involving (more on that later).

Power delivery is managed through Subaru’s claim to fame: ’symmetrical’ all-wheel-drive. In a nutshell, it refers to the alignment of the engine, transmission, and transfer case along the vehicle’s centreline to provide better handling and control compared with conventional systems.

Click image to enlarge

Unlike all-wheel-drive systems in many other vehicles, Subaru’s is a full-time affair, closer to Audi’s quattro in concept rather than any AWD Honda or Volvo.

Subaru dubs the system in automatic-equipped Outbacks “Variable Torque Distribution,” or VTD. The default torque split is 45/55 front to rear during dry driving conditions. Using an electronically-controlled hydraulic transfer clutch, a planetary-gear centre differential adjusts that split if conditions warrant.

Consistent with its car genes, the suspension in the Outback is independent at each corner and braking power is by four-wheel discs, ventilated and with twin pistons in front and solid with single piston in rear. Anti-lock control and electronic brake force distribution bring active safety to the brake rotors.

The 2005 offers about the same cargo capacity as last year, but it finds itself in much nicer surroundings thanks to the new interior design, which has finally been given the consideration it deserves. Metal-look plastic is all the rage these days, and in the new Subies it’s no exception. But it looks clean and classy, and the driver’s environment is well thought out.

Click image to enlarge

My only point of contention with the new Subaru - and this holds true for all Subarus I’ve driven with automatic climate control - is that this system does not work all that well. I find that the fan doesn’t slow down when the desired temperature is reached; rather, it changes the temperature of the air that’s blasting out of the vents. It’s also less automatic than its name would suggest: on a 25C-degree day last Fall, I had the system set at 25C degrees and it continued to blow cold air until I turned the fan speed down. Conversely, on a cooler day, I had it set at 22C and it was too warm in the car.

Click image to enlarge

The best climate control systems reach their set temperature and back off as quickly as possible to low speed. I think some software reprogramming is all that’s required here.

Driving the Outback proved quite a joy, considering I would have much preferred a stick. As manual-shifting automatics go, this is simply the best manumatic transmission I’ve tried, at any price. Driver-induced downshifts are smoother than any other, and there are up and down arrows on the instrument panel that tell you what your shifting options are. The delay between choosing to shift and the actual shift was noticeably quicker than most as well. It’s like someone actually designed the transmission to have a manual mode rather than just adding a manual selector gate on the console.

Click image to enlarge

There’s one true test of how effective a manual shift mode is: in most vehicles, I try it once or twice and dismiss it as a poor substitute for a stick. But with the Outback, I used it almost every time I drove it during its one week stay.

It didn’t hurt that the flat-six sings a beautiful tune and can really hustle when provoked, a big improvement over last year’s 212-hp unit.

The Outback gives up very little to its Legacy sibling in terms of driving dynamics, although the 17-inch Bridgestone Potenza RE 92s (the same tires as on the Legacy) howled in protest every time I tried to have a little fun in the corners.

At the base level, the Outback commands a $4,000 premium over a Legacy 2.5i. With the same body, same mechanical bits, and only cosmetics and ground clearance separating the two models, I question the value in choosing Outback over Legacy. But it nonetheless represents a far more satisfying and efficient choice over sport-utilities at the same price point.