Mercedes fights back: the new S-Class combines Stuttgart's latest technologies and best design.

Snaking down a serpentine Alpine road in Switzerland isn't what the Mercedes-Benz 2007 S-Class was created for. Surprisingly though, the Mercedes flagship handles the corners quite capably. It doesn't wallow, and remains flat while accelerating through hard turns.

An improved rack and pinion steering and a new air suspension help accomplish these maneuvers with aplomb. Numerous other innovations make the sedan feel like a smaller vehicle than it actually is. The 2007 S-Class is larger--longer by 1.7 inches, almost an inch wider and taller than its predecessor. The wheelbase has been lengthened by three inches; Mercedes only offers the long wheelbase S-Class in the U.S.

It's been a rough period for Mercedes in the U.S., where it now ranks fourth in luxury sales after Lexus, BMW and Cadillac. The new S-Class is clearly aimed at reversing the company's fortunes. The sedan comes in three models: the S450, S550 and S600. There will also be variants, including an AMG600 that Mercedes says will enhance sporty handling. The AMG is designed to challenge BMW's 7-Series as the performance leader in the segment and will arrive in showrooms late in 2006.

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I tested the S550 without a special sports package. Even so, it offered a lively, almost nimble, driving experience. The S550 also bristles with numerous engineering and electronics innovations that improve the overall driving experience. Some I liked--others I could live without. For instance, the S550 doesn't have keys. You unlock the car automatically by merely getting within close proximity with a keyless fob. Once inside, you can lay it down someplace (or keep it in your pocket) because you don't need it to start the car. Pressing a button on the instrument panel turns the engine over and shuts it off. Keyless entry is not necessarily a marvelous new innovation, however: I constantly left the lock controller in the car.

The new S-Class also has a modified version of the controversial iDrive navigation and control system that arch competitor BMW has pioneered. Mercedes calls their system COMAND. Like the iDrive it uses a single controller with a liquid crystal display screen to adjust climate, audio and navigation systems. It is moderately easier to use than the iDrive, but it's still not easy to master. Fortunately, there are redundant buttons that enable you to bypass COMAND for some functions.

But not all the new technology in the S-Class is so controversial. The drivetrain, in particular, is world class. It features the industry's first 7-speed automatic transmission and a powerful new 5.5-liter V8 that generates 382 hp. The transmission is smooth and effective. Gearshifts up and down occur when they're supposed to, without any surprises. However, if you want to override the automatic, there are paddles under the steering wheel that allow you to instantly change gears manually.

One reservation I have about the transmission is that it doesn't use a conventional gear selector. The S550 is equipped with a tiny shift lever that takes a little time to master. You push the lever up for reverse and down for drive. Push a button at the end of it to shift into park.

Many customers buy the S-Class because it is a status symbol, a car that shouts, "I'm a success!" S-Class buyers want to surround themselves in self-indulgent opulence. Indeed, this car satisfies that with luxurious leather and wood trim interiors that are tasteful, not gaudy. Interior sound levels are pleasingly low. Mercedes used lots of sound-deadening insulation to keep the passenger cabin quiet. Instrumentation is also superb. Dials and displays are easy to monitor without losing sight of the road in front.

The new S-Class retains its elegant exterior styling with a few evolutionary changes. The rear end picks up hints of the Maybach's rear bustle. The exterior is also a little edgier in spots. Its conservative styling camouflages one of the most aerodynamic cars on the road. With a coefficient of drag of 0.26, it is better than sleek sports cars like the Porsche 911 and Chevrolet Corvette.

For me, though, the big story is under the skin. The S-Class is an engineering marvel. Its powertrain is dazzling. The 5.5-liter V8 generates seemingly endless power that swiftly and effortlessly pushes the speedometer needle to triple digits. The S550 can blast down an autobahn at 150 mph all day and accelerate from 0 to 60 mph in 5.4 seconds. That's sports car performance, not what you would expect from a vehicle that weighs more than a Chevrolet Suburban. Yet the fuel consumption of the new model is lower than that of its predecessor, despite an increase of 50 hp.

Of course, you can't use all that power in the U.S. But it's nice to have when passing on two-lane roads. The roads I drove over were generally in good condition, so I didn't have an opportunity to see how well constructed the car is. But I never heard any vibration or rattles during the hundreds of miles I rode in the car. When you close the doors, there's that nice solid clunk you expect from a well-put-together vehicle.

Altogether there are a dozen new technologies for Mercedes cars in the 2007 S-Class, including night vision, Brake Assist Plus with radar sensors, and multi-contour 16-way power seats that mold to your body and provide massage, cooling and heating when desired. There's also an improved version of Mercedes' Pre-Safe system designed to prevent accidents, and eight air bags, two of which are adaptive. "It's our statement of what the Mercedes brand stands for," says Hans Multhaupt, a vice president who heads S-Class development. He forecasts that Mercedes will sell 80,000 S-Class units worldwide annually. Only about 18,000 2005/2006 models will be sold this year in the U.S. as the current generation sells off, but that total is expected to soar to about 25,000 cars next year.

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The S-Class epitomizes the ultimate in prestige, technology and performance. But is it good enough to restore the luster on the Mercedes-Benz tri-star, which has dimmed over the last decade? BMW has roared ahead in U.S. sales. So has Toyota's Lexus luxury brand. Even GM's Cadillac Division, which had all but been written off only a few years ago, has stormed back to surpass Mercedes in sales volume.

But Mercedes remains king of ultra-premium sedans. It sells over 50 percent of cars priced at more than $100,000, thanks mostly to the S-Class. That model is arguably the most aspirational luxury sedan for affluent business leaders. Some 500,000 units of the current generation, which went on sale in 1998, have been sold worldwide.

Later in 2006, an S450 with a smaller V8 and the S600 with a 5.5-liter twin-turbo V12 will become available. The V12 cranks out 510 hp. and 612 lb.-ft. of torque. Prices for the S450 start in the low $70,000s and zoom to more than $130,000 for the V12.

Bart Herring, S-Class product manager for Mercedes-Benz USA, forecasts an average price for the S450 of about $82,000 and $90,000 for the S550. He estimates that the S550 will account for 55 percent of sales and the S450 will capture about 35 percent. The S600 and an AMG version of that will split the remaining 10 percent. Prices are about 2 to 3 percent higher than for the 2006 model, but the new model includes some items that were not standard on the predecessor. Here are some of the nifty things you get for those lofty prices:

* Besides big disk brakes all around, an enhanced brake assist system debuts in this model. It not only produces full-power braking assist when you hit the brake pedal, but also increases pressure if you don't apply enough pedal pressure. I slammed on the brake pedal when I absentmindedly got too close to a car in front of me that was stopped at a red light. The brakes stopped me quickly without even activating the ABS system.

* Distronic Plus cruise control maintains a preset following distance, using radar signals to control how close you get to the vehicle in front of you. It works at speeds of up to 125 mph.

* Radar-assisted parking uses six radar sensors behind the front and rear bumpers to keep your car from hitting other vehicles while maneuvering into a spot.

* Night vision is an infrared system that increases front visibility by almost 500 feet, giving you a black-and-white image on the instrument panel. It "sees" through fog and other bad weather.

* The latest state-of-the art passive security systems are built in for safety. Also included is an audio system that produces concert-hall sound and Bluetooth wireless telephone communication.

In short, the S550 is a noticeable step up from its predecessor. It is more luxurious, more technologically advanced and more powerful. Mercedes presents the S-Class as the best sedan in the world. At its lofty price levels, it should be.