Many years ago, there was an ad with the tag line, "You've come a long way, baby." Fast-forward to today, and you could well be talking about Hyundai.

The Korean-based automaker is long past the bargain-basement models it offered when it first came to Canada. For 2006, it finally cracks the premium sedan market with the all-new Azera. It's not the first high-end Hyundai, as it replaces the equally oddly-named XG350. But it's larger than its predecessor, and light-years ahead in comfort, performance and quality.

Built in Ulsan, South Korea, the Azera features an all-new, all-aluminum 3.8-litre V6 with continuously variable valve timing (CVVT) and a variable intake system, along with a timing chain for ease of maintenance. It's mated strictly to a five-speed automatic transmission with manual shift mode.

But it's all about the package, and where Hyundai succeeds is in bringing it all together. Certainly there are elements lifted from other automakers – the nose looks faintly Accord, and the rear end is all BMW Bangle-Butt – but for the first time, the company's top-end sedan feels engineered as a single unit. Compare it to the XG350, or even more so to sister company's Kia Amanti, and you immediately notice the difference. The Amanti has the interior of a Lincoln but wallows over the highway like it has marshmallows atop its shocks. By contrast, the Azera's overall performance, while still more highway cruiser than sports sedan, lives up to its promise.

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Despite its numerous design elements, the Azera is elegantly styled, with LED taillights, projector-beam headlamps, chrome handles and dual exhaust. There's a lot of beige plastic in the interior, but it's textured and the panels fit together well, and faux wood is restricted to a few accents. Standard features include eight airbags (including front and rear side impact, and curtain bags), six-speaker CD/MP3 stereo, dual-zone climate control, heated seats, HomeLink garage door opener, power folding mirrors, sunroof, wheel-mounted audio controls and variable intermittent wipers. My tester came with the Premium Package, which adds an in-dash six-disc CD/cassette stereo with ten speakers, leather seats, power-adjustable pedals, power rear sunshade and rain-sensing wipers.

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Other standard niceties include tip-out front door pockets, full backlighting on controls, automatic headlamps, five settings on the heated seats (they dial up or down, and come back on with the ignition if they're not turned off beforehand; they take a long time to heat up but get quite hot when they finally do), footwell theatre lighting that comes on when the car's put in Park, and inside door handles that override the locks, a very handy feature when you're running a lot of errands.

Equipped with CVVT and four valves per cylinder, the Azera's 3.8-litre delivers a very impressive 263 horsepower, with a broad powerband that makes for smooth take-offs while remaining fearless on the highway, with enough in reserve that you can make fast decisions when traffic problems arise, and accelerate hard to get out of trouble. The speed-sensitive rack-and-pinion steering isn't as quick as you'd find on a sports sedan, but it tightens up confidently at higher speeds. Electronic traction and stability control are standard equipment.

Suspension is double wishbone up front, with multi-link rear, twin-tube gas shocks, and front and rear stabilizer bars. The ride is big-car comfortable, although there's a bit of suspension noise over bumps and potholes.

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Inside, the Azera coddles you in comfort. The seats provide good, if not exceptional support, with power adjusters for driver and passenger. Controls fall easily to hand, with easy-to-use buttons for the stereo and climate control. I'm not a fan of gated shifters, and sometimes got caught up in the gate between Drive and Reverse when shifting quickly, but in its favour, the manual mode is push-pull, a far more natural movement than side-to-side. The rear seat is very roomy, with a pull-down armrest that takes two cups, and flips open to form a barrier that keeps drinks from tipping forward. Folding the 60/40 cushions expands the 110 cm-long trunk to a not-quite-flat 195 cm of length, with two cargo tie-downs on the trunk floor.

I found fuel consumption to be quite high; while it's officially rated at 12.8 L/100 km in the city, I only got 14.2 L/100 km in combined driving.

The Azera has a lot going for it: it's got more power than many of its competitors, it's a lovely car to drive, and it offers an extra-long five-year/100,000 km comprehensive warranty, including 24-hour roadside assistance.

Its major drawback is its price: there's a lot here, but you're paying for it. The base Azera is $34,495; equipped with the Premium Package, which brings it to $37,495, it's costlier than the Buick Allure, Buick Lucerne V8 CXL, Ford 500 FWD, Lincoln Zephyr, and even the Cadillac CTS. Hyundai also traditionally holds a lower residual value than most premium automakers, which might be a consideration if you're planning on trading it within a few years.

My experience with the outgoing XG350 was that, nice as it was, it made me realize just how much of a deal the Sonata was. That hasn't changed; the all-new 2006 Sonata is great to drive, only slightly smaller than the Azera, offers 235 horsepower and tops out at $28,000. It doesn't have all the Azera's luxury features, but if the budget is of primary concern, it's an excellent alternative. No matter which one you choose, the ad slogan still stands: this company has certainly come a long, long way.