You might not be able to tell by looking at it, but Volkswagen has taken a darned good car—the last-model Jetta—and made it considerably better.

But first, we have to take account of the Jetta's extreme makeover. The old Jetta was probably the most handsome car on the road for under $20,000, with a stately stance and the graceful balance of a ballet dancer. The new Jetta has been squished and flattened, with a stubby hood reminiscent of the podlike Prius and a side cut that's more modern, but less distinctive. The overall look may be a bit more avant-garde, but something about the new Jetta also makes it look more down-market.

That's ironic, because VW is trying to go the opposite direction. The company that recently launched the $70,000 Phaeton and the $40,000 Touareg SUV—with very limited success—is trying to raise the Jetta's social standing too. The base model, which VW calls the "value edition," starts at about $18,500. Since the label seems designed to encourage self-respecting buyers to move up to the next level—like the "princess cut" of prime rib at a steakhouse or the "child's" popcorn at a movie theater—many buyers will most likely consider the $21,000 2.5 model. In fact, they'll have to, if they want some of the nicer features they might see advertised—like alloy wheels, exterior lighting, or an optional moonroof—since they're not available on the value edition, for some reason. Add automatic transmission and a few other options and you're quickly into the mid-$20s, for a car formerly known as a great bargain. So don't bother comparing the Jetta to the Honda Civic or the Toyota Corolla anymore. It's now reaching for Accord and Camry territory and could even be considered a plausible alternative to entry-luxe sedans like the Volvo S40.

Once you accept the Jetta's class-climbing ambition, it's easy to appreciate the rest. A 150-horsepower five-cylinder engine is standard on all Jettas (except for the turbodiesel) and gives the car a racy quality not found in most cars of its size. The biggest improvement is the Jetta's handling. The old Jetta could be soft on curves, with the nose diving into the pavement on tighter turns. On the new model, front and rear stabilizer bars and other suspension features produce crisp, aggressive performance that will enhance the Jetta's reputation for fun motoring. Volkswagen also gets high marks for a full suite of standard safety features, including antilock brakes and side-curtain air bags on all models. And if you want to spend the bucks, you can dress this little sedan up in finery like ash wood trim and anthracite spokes on the wheels. The Jetta may have become a dandy, but at least there's substance beneath the fluff.