The standard front-wheel-drive, four-cylinder Highlander makes a superb wagon for the city and suburbs, especially now that traction control and stability control are standard equipment. Highlander is far easier to deal with on a daily basis than a truck-based sport-utility. Though you ride a little taller, you look eye to eye at Volvo wagon drivers.

The four-cylinder engine offers good power. It's quick, smooth and quiet. Power is up slightly from the 2003 model to 160 horsepower and 165 pounds-feet of torque. We found the four-cylinder version to be a happy performer and didn't feel like we were missing something by not having the V6. The four-cylinder gets significantly better fuel economy than the V6 (22/27 vs. 18/24 mpg EPA-estimated City/Highway). The four-cylinder Highlander comes with a four-speed automatic transmission. It features a Snow Mode for improved throttle control when starting up on a slippery surface from a standstill.

The optional V6 is larger and more powerful this year, at 3.3 liters and 230 horsepower (vs. 3.0 liters and 220 horsepower in 2003). Torque is increased significantly, to 242 pounds-feet. Torque is that force that propels you away from intersections and up hills. Further enhancing engine smoothness are active-control engine mounts that cancel vibration. Toyota recommends using premium fuel for the V6, but it runs fine on regular. The new V6 is mated to a new five-speed automatic.

Highlander feels at home around town, amidst traffic lights and parking seekers. It's a good size for city streets and soaks up potholes and irregular pavement well. Rolling into suburbia, the Highlander fits right in. It's a natural mall-crawler, maneuverable and quick to nose into a parking slot. It cruises well on major highways, offering good stability and a smooth, quiet ride. It's a solid-feeling structure.

The steering effort is very light at low speeds, so it's easy to turn in tight quarters. Grip is quite good for hard cornering, better than expected. On winding roads, though, the steering felt slow and vague. The suspension is too soft for hard driving. There's too much body movement. The car wallows in corners, the body leans.

Toyota's electronic Vehicle Stability Control (VSC) with traction control (TRAC) is now standard on all Highlanders. VSC can detect sliding of either the front or rear wheels and reduces engine power and/or applies the brakes on individual wheels to correct the Highlander's course.

Braking is certain and smooth. Standard on all 2004 Highlanders are anti-lock brakes (ABS) with Electronic Brake force Distribution (EBD) and Brake Assist. ABS helps maintain steering control while braking hard, while EBD optimizes brake force at each wheel under different load conditions, or as the car's weight shifts forward under braking. Brake Assist detects emergency braking and automatically maintains enough brake pressure to engage the ABS even if the driver makes the mistake of relaxing pressure on the brake pedal.

All-wheel drive works great in slippery or inconsistent conditions. Snow melt, muddy ruts, icy patches on shadowed curves were easily handled by our AWD V6 Limited. On a meandering back road, the Highlander cut up hills through eight inches of newly fallen snow like a snowplow on a rescue mission. All-wheel-drive Highlanders use a permanently engaged system that splits torque 50/50 front/rear, and relies on TRAC's electronics to limit slippage at any wheel. Highlander is intended primarily as a highway and street vehicle with all-weather capability. It is not meant for boulder bashing and serious off-road driving. That said, we found the Highlander more capable in demanding situations than Toyota publicizes. After all, Toyota has the 4Runner for serious off-road duty.