I traded in my 2002 VW Passat wagon for the 2010 Outback. The VW had a better interior. You felt like you were in a higher class car then just a VW. The Outback's interior is not that bad though. Just not up to the VW.
The Monsoon sound system in the VW was much better then the base sound system in the Outback. The Outback's system is bad. I will be changing the radio and speakers when I get motivated enough to remove the interior door panels.
The 1.8T engine in the VW felt like it had much more power for merging in traffic. The 0 to 60 mph time was in the 8 second range vs the 2.5i engine which is in the 10 second range. So you do have to do a little more "planning" when merging onto a busy highway. However, I am getting a consistant 2 mpg (regular vs premium fuel is a plus too) better in the Outback which is pretty amazing when comparing an AWD car vs a FWD car. At least I think it is amazing. My daily travels back and forth to work keep me on two lane roads (with mostly 50 mph limits) so I don't miss the lower engine performance. I do have the MT so that does help the sporty feel factor.
The ride in the Outback is much smoother. The VW handled better in the turns. I did the rear sway bar mod on the Outback and it helped greatly. Enough so that I don't worry about high speed turns anymore.
Interior room in the Outback is much better then the Passat. I am 6' 1" and when I set the front seat for me in the Passat, there was very little leg room behind me for my kids in their car seats. When I set the seat in the Outback, my kids feet have plenty of room. There is actually more foot room for my kids then in my Suburban. Passenger and driver space is amazing compared to the Passat.
I feel the Pasat did have more cargo room behind the rear seats. This is probably because the rear seat room is so spacious. However, there is still plenty of room so it does not worry me.
It is also much easier to get in and out of the Outback because of the added ground clearance. I felt like my butt was dragging in the Passat. It is also much easier to get my kids in and out of the car seats because ground clearance and the space in the rear seat area. Having the ground clearance also helps when parking in fields for events you attend (festivals, fireworks, sporting events, etc.). It also gives a little better view of the road.
Another plus is that the A/C in the Outback is much colder then the Passat. For some reason, the A/C was undersized in the Passat Wagon. You can read about that in other VW forums.
Something I don't think others have mentioned is that there is a better view of traffic lights. In the Passat (and my Suburban), if I am the first at a traffic light, I can't see it without bending my head down. The roof line is in the way because I am taller. With the Outback, I have no problem seeing traffic lights.
Finally, the AWD vs the FWD is great. My Passat was always spinning the front wheels when the road was wet. The Outback sticks to the road, period. When the East Coast had the two blizzards this year, I took the Outback out and had no problems getting around. My Passat was scary in the snow, even with snow tires. I leave in a hilly neighborhood though. So I am biased on this point.
Overall, my Subaru is great. It does everything I need it to do as an everyday car. I do not have second thoughts about trading the VW for the Subie. It is not a perfect car, (mine stalls, exhaust system rattles when RPMs drop low, rocker panels have the sand blasted look) but it does everything I need it to do, economically and comfortably, right now.
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