When we first drove the new GTI in December of 2004, it impressed us with its torquey, direct-injection turbo four-cylinder and solid chassis. It felt like a return to the formula that made the original 1983 GTI a cult icon for car nerds: a combination of sports-car handling and station-wagon versatility with the price of a workaday sedan. But that drive was in the European-market GTI, not a U.S.-spec car. Haughty German engineers often decontent and soften the cars they send us to suit their preconceptions of Homer Simpson-like American tastes, but now that we've driven the U.S.-spec GTI, we're happy to report that Volkswagen engineers left our car plenty sharp.

In fact, not much changed for the GTI's journey across the Atlantic. To better survive collisions with trucks and SUVs, the U.S. car rides 0.6 inch higher (the same height as the Golf), but that makes it more prone to body roll, if less likely to crash into its bump stops. Like the Euro GTI, our version can be throttle-steered; if your arc into a corner is too wide, back off the gas, and the front tucks in as if it's reading your mind. The U.S. GTI isn't as stiffly sprung as a Mitsubishi Evo, so it will make a more livable conveyance in the frost-beaten Rust Belt. This fifth-generation GTI feels utterly responsive but never punishing. The steering is precise and nicely weighted, and torque steer never snatches at the wheel, which is quite a feat given the prodigious off-the-line grunt.

Buyers can choose between the standard six-speed manual or VW's superb dual-clutch sequential-manual DSG transmission, which operates smoothly when you're inching along yet is lightning quick to downshift. The DSG will include a launch-control program later in 2006 (when we also get the Q-ship four-door GTI and the regular Golf), but for anything short of a smoky burnout, the current setup is nearly ideal.

The GTI is slated to cost only about $23,000 including destination fees, a CD changer, xenon lights, seventeen-inch wheels, stability control, six air bags, and retro-chic plaid upholstery. More money will buy leather-clad seats, a cumbersome navigation system, and a sunroof, but all the froufrou pushes the price close to $30,000. The only extras we'd consider are hollow-cast eighteen-inch wheels and the DSG ($750 apiece), because then we'd have a refined, capable, well-equipped, and truly fun hot hatch for less than $25,000.

VW's top dog, Bernd Pischetsrieder, called the previous GTI a "joke" while the car was still on sale here. This wasn't humility, it was a promise to the VW faithful that the new GTI would be worth waiting for. VW has kept that promise: the new GTI is not just better than the car it replaces; it's good enough to be on any smart enthusiast's short shopping list.