The company’s first foray into gasoline-electric hybrids is the Touareg Hybrid, a midsize crossover sport-utility vehicle. It’s part of a three-vehicle lineup that includes two V6 models, a 280 horsepower, 3.6-liter gasoline version and a 3.0-liter turbocharged diesel that makes 240 horsepower. Loaded with tons of standard premium features, the Hybrid is not exactly in the luxury segment, but clearly not entry-level, and therefore has no direct competitors.

The Volkswagen Touareg Hybrid was all new for 2011 with no significant changes for the 2012 model year. For 2013, LED taillights and rear license-plate light are new as is Vavona interior wood trim. Base price for the 2013 Touareg Hybrid is $62,055, a $60 increase from last year.

About the name: It’s pronounced TOUR-egg, and is named after an African Sahara tribe of nomads called the Touareg (pronounced TWA-regg). Volkswagen says the nomadic tribe has a hearty reputation, calling them “the ultimate off-roaders.”

Das Hybrid

The Touareg Hybrid shares its drivetrain with the Porsche Cayenne S Hybrid. That means adding a 47 horsepower (35kw) electric motor to an Audi-sourced supercharged 333 horsepower V6 engine. This brings total output to 380 ponies and a peak torque of 425 pounds feet at just 1,000 rpm. The powertrain has the added bonus of a 7,700-pound towing capacity. That far exceeds other hybrid crossovers as well as most gasoline powered midsized models.

Volkswagen joins other manufacturers in the move away from the continuously variable transmission (CVT) employed by most hybrid vehicles. The eight-speed, driver-shiftable automatic transmission is not only a less costly hybrid approach, it wrings out the most power from the engine and makes the Touareg Hybrid feel more like a car than an SUV.

The drivetrain is completed with VW’s 4Motion permanent all-wheel drive system with a Torsen self-locking center differential. Biased 60 percent to the rear during normal driving conditions, if one of the wheels starts to lose grip, the differential directs torque to the axle with the most traction.

The hybrid system’s unique feature is a hydraulic clutch between the engine and motor that disengages the engine so it can shut down under light loads. The electric motor then takes up the load until the engine restarts. Volkswagen engineers call the result “sailing” – for the quiet sensation of speed using only electric power.

As in most hybrids, the electric motor also restarts the engine, and recharges the 288-volt nickel-metal-hydride battery pack fitted into the former spare-tire well. The hybrid system is tuned to give lots of electric assist at highway speeds, which silences the usual hybrid critics, who frequently gloat that most hybrid systems are useless during Interstate cruises.

Volkswagen says the Touareg Hybrid runs up to 31 mph for around two miles in all-electric mode. More remarkably, the company also says it can run on electricity at speeds up to 99 miles per hour – though that’s slightly deceptive, since it means the engine may shut down for a while at speeds that high, leaving the electric motor to propel the car. Still, traveling on battery power at speeds higher than any legal U.S. limit is quite an accomplishment for a 5,135-pound vehicle. Additionally, with the disc-shaped electric motor placed between the engine and transmission in the parallel system, there’s no electric whine when the motor moves the Touareg alone.

As for on-road performance, the company says the hybrid Touareg posts 0 to 60 mph in 6.2 seconds with both the electric motor and the boosted engine providing power. Top speed is 150 mph. At the same time, fuel economy ratings of 20 in the city and 24 on the highway – while not dramatically high numbers – are a big step up from the gasoline powered variant, which has city fuel economy in the mid-teens.

Euro Styling

When Volkswagen redesigned the second-generation Touareg for 2011, it dialed back the off-road-ready character of its predecessor and shed some 350 pounds in the process. Yet it’s larger inside and out, with clean, muscular styling that is more European wagon than American crossover.

Up front the Touareg Hybrid wears VW’s new corporate design. Staunch vertical lines of the grille blend into the swept back Bi-Xenon headlamps that are outlined with LED running lights. The lower grille is bolstered on either side by large air intakes that add a slightly muscular look.

Well proportioned defines the overall look. Body lines are clean with no sharp creases, while pronounced rear haunches add a touch of flair and there’s just enough chrome trim to spice things up. The only evidence of its greenness are small hybrid badges that adorn the front and rear on the exterior.

Inside, the Touareg Hybrid looks as if top interior decorators designed the cabin and grabbed materials from Audi when they weren’t looking. Leather upholstery has a nice, pronounced texture; the brushed metal and wood trim aren’t overdone. A standard panorama glass sunroof turns the cabin into a veritable Vista Dome railroad car.

The dashboard is straightforward with clean lines and is laid out in a way that makes it easy to locate all the controls. Gauges are white with red indicators and thankfully not the bright blue and red illumination found in other Volkswagen models.

Seats are pleasantly firm and hours-long comfortable, and not just in the front row. The heated rear 60/40 split bench seat is fully adjustable, sliding forward and aft enough to make room for long-legged passengers. The seats can be easily folded to expand rear cargo space from 32.1 cubic feet to a generous 64 cubic feet. A standard power tailgate quickly opens to a low load height cargo floor.

A lengthy list of standard gear begins with an eight-speaker audio system with more audio sources than most – 18GB of music storage on the hard drive; a port offering iPhone, mini-USB, standard USB, and 1/8-inch audio connectivity; Bluetooth audio streaming; satellite radio; and a CD player with two SD card slots. Curiously, the Hybrid doesn’t offer a rear cabin DVD entertainment system.

The Touareg Hybrid gets VW’s latest navigation system with hard-drive-stored maps showing 3D views of the terrain and outlines of buildings. Below the eight-inch color touch screen, buttons offer quick access to the stereo, navigation and Bluetooth phone system.

A rear view camera and park-distance control are standard, as is adaptive front lighting. This feature perceives oncoming traffic and adjusts the headlight beams to eliminate unwanted glare.

A Short Test Drive

Like all hybrids, the Touareg requires a light touch on the accelerator to operate in electric-only driving. But unlike other systems, the decoupling of the engine – the “sailing” function – operates at any speed so, even when driving in the city, the engine shuts down and the electric motor takes over long before the car comes to a stop. At 70 mph highway speeds, depending on the terrain, the Touareg sailed in silence for nearly a mile. A “Sport” mode reduces the sailing feature to speeds under 45 mph, but brings to the forefront the combined power of the gas engine and electric motor with the application of a heavy right foot.

The ride leans towards Germanic-stiff, but won’t jar, and overall, the fully independent suspension carries it well. Weighing two-and-a-half-tons, the Hybrid can feel a tad top heavy in quick changes of direction, but nowhere near enough to be troubling. It’s electro hydraulic power steering steers with a natural linearity, while the regenerative brake system is quite touchy and takes some getting used to.

Local knowledge of a not-well-known off-road trail between downtown Seattle and SeaTac airport provided the opportunity for a taste of the Hybrid’s bark and bite. The not-quite-three-mile-loop is deeply rutted in spots with a couple of steep hills.

The Touareg Hybrid doesn’t have the chops of, say a Land Rover Discovery, but the 4Motion system can handle terrain that the typical owner will want to drive on. A console-mounted off-road mode locks all four wheels and adjusts the traction control and drivetrain programs. The suspension did a decent job of eating up potholes and the 7.9-inches of ground clearance kept the undercarriage undamaged. As advertised, the standard hill-descent control allowed us to slowly creep downward with feet off the pedals as the system kept engine revs low and automatically modulated the brakes.

Economics

Yes, the 2013 Touareg Hybrid’s MSRP of $62,055 is nearly $19,000 more than the base gasoline model, and $15,000 more than the base turbo diesel version, however, the Hybrid is luxury loaded for its price. When compared to the gas and diesel top trim levels, the price difference shrinks to $7,000 and $3,400 respectively, which is a typical variance between a hybrid and non-hybrid version of the same model.

An obvious comparison is the 2013 Lexus RX 450h AWD. Its MSRP of $47,310 is $14,745 less than the Touareg Hybrid and trumps the Volkswagen’s fuel economy with an EPA rating of 30/28/29. However, add the Lexus options that are standard on the Touareg, and the price difference shrinks $5,835. While the RX 450h is available with a rear seat entertainment system, the AWD setup is not suitable for off-road driving and the towing capacity is half the Touareg’s.

If you need seating for seven, Toyota’s top-of-the-line all-wheel drive Highlander Hybrid LTD offers near-luxury appointments starting at $44,370. Fuel economy of 28/28/28 bests the Touareg Hybrid. But like the Lexus, off-roading is a no-no and towing is limited to just 3,500 pounds.

If you really like the Touareg and rack up a lot of highway miles, the Touareg TDI diesel registers 28 highway mpg and costs $3,400 less when comparably equipped.

The Touareg Hybrid may not be the best value for the money spent, but if you have the greenbacks to go Volkswagen green, buy it: You’ll like the performance and handling, the luxurious interior, the off-road and towing capabilities along with improved fuel economy.

Prices are manufacturer suggested retail price (MSRP) at time of publication and do not include destination charges, taxes or licensing.

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After years of arguing that clean diesel is a better efficiency strategy compared to hybrids, Volkswagen is switching gears. In a statement issued on the eve of the 2010 Geneva Motor Show, Martin Winterkorn, VW chairman of the board, said, “We will take the hybrid out of its niche status with our high-volume models. In the future, the heart of the brand will also beat with electricity.”

VW’s Electric-Drive Roll Out

• A hybrid version of the Jetta will be offered in the US in 2012
• In August 2013, the Passat Hybrid will be introduced, followed by a Golf Hybrid two months later
• Starting in 2013, VW will begin rolling out pure electric cars, starting with the e-up! minicar, followed by an all-electric Golf, and other electric vehicles yet to be named
• VW’s luxury brand Audi will also launch hybrids, beginning with an Audi Q5 Hybrid in early 2011, and a limited introduction of the electric e-tron in 2012

The Volkswagen press release states: “Starting in 2013, the high-volume Golf and Jetta models of the Volkswagen brand are expected to dominate the hybrid and electric vehicle market.”

The Eight-Year Goal

While Winterkorn’s announcements might impress future consumers interested in fuel efficiency, the VW Touareg Hybrid—its first hybrid offering, due in fall 2010—is likely to disappoint. Last month, Volkswagen unveiled a lighter leaner Touareg design, including a hybrid variant, ahead of the Geneva show. The Touareg indicates a move in the right direction, replacing the previous V8 gas-powered SUV with a lighter-weight version using a gas-electric six-cylinder powertrain with direct injection. The performance, size and towing capacity are impressive, but the expected fuel economy in the mid-20-mpg range, will fall in the middle of the Hybrid SUV pack.

“The goal is to become the market leader in E-mobility by the year 2018,” said Martin Winterkorn. His goal is to make electric vehicle’s three percent of VW sales by 2018—a target which is surpassed only by Nissan which claims that electric cars will be 10 percent of the global auto market share by 2020.

The year 2018 is also when VW hopes to overtake Toyota to become the largest automaker in the world.

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EPA ratings for the Touareg TDI are now 17 in the city and 25 on the highway. These numbers may not seem extraordinary, but they beat out the gas V6—rated at 16 city/20 highway and the embarrassing V8 with its 12 city/17 highway. The TDI is clearly the best balance of fuel economy and performance.

The 50-state legal Touareg TDI is defined by a common rail system operating with piezo injectors and a urea-based treatment, as opposed to the outgoing V10’s less effective unit injectors—a technology that VW has suspended from further development. In addition, the newer clean-diesel system utilizes advanced catalytic converters and an exhaust filtration system to minimize pollutants at the tailpipe.

In terms of drivability, the Touareg remains both compliant on the road and capable on the dirt. It has plenty of low-end grunt thanks to a standard four-wheel drive system with adaptive torque distribution. For even more off-road confidence, the Touareg offers an optional locking differential. And for even more cushiness on the pavement, buyers can opt for an adjustable air suspension that raises and lowers the body of vehicle depending on speed and other road factors.

Exterior and interior elements remain upscale and high quality. The Touareg is arguably in the same class as the Porsche Cayenne, BMW X5, and the Acura MDX. In terms of price, MSRP for the TDI is $42,800, slotting between the V6 and V8 gas engine versions. But if diesel fuel remains lower than gasoline, and with its higher fuel economy, the Touareg may be the most affordable model in the line over a full period of ownership.

In the case of the new Touareg TDI, smaller is definitely better. This SUV is more refined, less wasteful, and serves as another example of the benefits of clean diesel.

Raves and Rants

Autoblog gives the Touareg TDI high marks for ride “best described as business casual: crisp and smart, it suits all of the sporting situations you could wish to get into in an SUV.” At a cruise, Autoblog said the TDI is “quiet as a church,” but the engine noise becomes jarring under hard acceleration. Edmunds noticed the same problem, describing it as a “faint, low reverberatory sound emanating from the cargo area at highway speeds.” Edmunds also dinged the Touareg TDI for not including a third-row seat. But the power and refinement earns high scores from most reviewers. Motortrend said, “Whether going uphill or on flat roads, power delivery is so smooth and effortless it’s as if you’d run out of road before the VW ran out of steam.”

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