PALO ALTO, CA – The palms grow moist as the all-new Infiniti G35 sedan moves like yarn through a loom along narrow, high-banked, 2-lane roads in the Santa Cruz Mountains near here.

This is beautiful country, but our hasty tour is not about casual sightseeing. We see plenty of massive hundred-year-old hardwood trees rooted precariously close to the asphalt – and, consequently, our front bumper.

The trees may appear to be a hazard, but, in truth, they might be the only obstacles preventing a skidding motorist from plummeting off a cliff to certain death.

These switchbacks seem to go on forever, each one more exhilarating than the last, tempting drivers to test the laws of physics while completely unaware of what lies around the bend. The roads often seem too narrow to accommodate one vehicle, let alone a second going the opposite way.

Finally, a lumbering utility truck appears in the distance, heading in the same direction at a much slower pace, with no room to pass. Fun time is over.

“Oh, thank God,” says a passenger, who, unbeknownst to the driver, was turning green and was highly agitated to find the G35 lacks a passenger-side air-sickness bag.

The stylish and lithe second-generation G35 can count itself among the rare automotive species that inspire drivers to continually test its performance limits.

The first-generation G35 represented a risk for Nissan Motor Co. Ltd.’s flagging Infiniti luxury brand in 2002 when it launched in the U.S. as an ’03 model. The G35 sprang from the FM (Front Midship) architecture that also underpins the Nissan 350Z, G35 coupe and Infiniti FX cross/utility vehicle.

Most formidably, the first-generation G35 would do battle in the fierce lower luxury segment, which has nearly 20 competitors and is known for chewing up and spitting out weak players.

But the G35 has more than held its own, managing a solid third place in 2005 by racking up 68,728 deliveries. Only the BMW 3-Series and Acura TL sold more. More importantly, the first-generation G35 helped spark a product renaissance at Nissan and Infiniti that continues today.

However, the outgoing model needs reinforcements in this tight segment. This year, the Lexus brand is on a tear with its new IS and ES sedans. The ES already has wrestled its way to third place past the G35 and is neck-and-neck with the Acura TL for second place, according to Ward’s data.

The brisk-selling IS is bearing down hard this year on the fifth-place Cadillac CTS and the first-gen G35.

But now that the all-new G35 is gracing U.S. showrooms, it will pull closer to the almighty 3-Series and further outpace the CTS, Mercedes C-Class, Audi A4 and others.

The cavalry has arrived, riding on the second-generation unibody FM chassis that Infiniti says is 40% stiffer than the first, isolating annoying vibrations.

Following the sedan, an all-new G35 coupe arrives in mid-2007 as an ’08 model. Incidentally, Infiniti says it will introduce a third new vehicle in fall 2007.

The footprint of the new G35 is extremely close to the model it replaces. Wheelbase is unchanged at 112.2 ins. (285 cm), but the new car is 0.8 ins. (2 cm) wider and 0.5 ins. (1.3 cm) shorter than the old G.

Despite looking beefier, the car gains only 29 lbs. (13 kg) in rear-wheel-drive, 5-speed automatic guise, tipping the scales at 3,497 lbs. (1,584 kg).

The outgoing G35 was attractively styled, and Infiniti wisely retained the sheet metal’s overall shape. At the corners, however, the styling is a bold departure. Headlamps and tail lamps wrap around the corners, bulging like an athlete after months of hard weight training.

As an aside, the active headlamps swivel up to 23 degrees to provide better illumination on curves.

And how many Japanese cars on sale in the U.S. actually play up their Japanese heritage? The G35 does so with style and class.

The chrome grille, Infiniti says, is meant to resemble lethal samurai sword blades stacked one on top of the other. And one particularly fetching interior trim package includes brushed aluminum on the instrument panel and doors finished to lend the appearance of Washi, a handmade Japanese rice paper that resembles crinkled wax paper.

But the heart and soul of the new G35 is its engine, the fourth generation of Nissan’s heralded VQ V-6 family, which has won a Ward’s 10 Best Engines award for 12 straight years.

The new design (known internally as VQ35HR, for “high-revving”) has 80% new parts, improved cooling and increased airflow that produces a ram-air effect at certain speeds.

With 306 hp at 6,800 rpm and 268 lb.-ft. (363 Nm) of torque at 5,200 rpm, the VQ is exceptionally strong in all gears.

During the vehicle launch here, Infiniti product planners confound journalists by claiming the VQ was designed to produce “acceleration swell.”

Rather than delivering torque in a straight linear rush that tapers off in the upper reaches of the rev range, the new VQ accelerates in building waves, sprinting faster and faster all the way to the 7,600-rpm redline, Infiniti says.

Without benefit of a dynamometer and our own high-speed oval, we’ll have to take Infiniti’s word for it.

All we know is the new VQ whispers at idle, cruises amicably and assertively in normal driving and howls like a tormented jackal under hard acceleration.

There are only two quibbles with the new engine.

After a number of test drives (some of them admittedly vigorous), the G35 barely musters 20 mpg (11.7 L/100 km), which puts it in V-8 territory at a time when high fuel prices are cutting into V-8 volumes.

The Environmental Protection Agency fuel economy ratings are 19 mpg (12.3 L/100 km) city and 25-27 mpg (9.4-8.7 L/100 km) highway. The Lexus IS 350 gets better fuel economy, while producing the identical horsepower and more torque.

Also, the VQ V-6 when mated to a 6-speed manual transmits too much vibration through the clutch pedal, especially at high revs. The same problem has haunted the current-generation G35 platform since its launch. Oddly, the steering wheel conveys no hint of engine vibration.

It is a minor offense, as the manual only is available on the G35 Sport package.

Infiniti expects 90% of G35s to sell with the capable 5-speed automatic (six speeds would be more contempory, though), which comes available with magnesium paddle shifters and electronically controlled downshift-rev matching – a great feature for Formula 1 aficionados.

The car stays firmly planted in aggressive maneuvers, and the independent double-wishbone front suspension and multi-link rear setup work effectively to minimize body roll.

Four-wheel vented antilock disc brakes are paired with electronic stability control (branded by Infiniti as Vehicle Dynamic Control) for extra assurance, while a viscous limited slip differential is standard on sport packages.

Speed-sensitive rack-and-pinion steering is precise and nicely weighted, tracking with authority and inspiring confidence.

Rear-wheel active steering also is available on sport models (as well as on the current-generation G35 coupe) to improve stability during lane changes and low-speed maneuverability in parking lots.

Rear active steer might be practical for fullsize pickups, but in a midsize sedan the feature seems like nothing more than a parlor trick of questionable utility. Thankfully, it is a standalone option, costing $1,500.

A more popular option will be all-wheel drive, which splits torque evenly during normal driving and can apportion 100% of the torque to the rear axle or the front axle, depending on where traction is needed. Rear-wheel steering and AWD cannot be coupled.

Unlike Honda Motor Co. Ltd.’s Super Handling All-Wheel Drive, the G35’s AWD system does not dole out torque side to side.

Inside, the G35 borders on the spectacular. Inviting, warm, ergonomic and comfortable, the cabin, like the 3-Series gold standard, strikes the ideal balance between luxury and sport.

The instrument panel is beautifully laid out with nary a seam in the soft-touch fabric between the A-pillars. Horizontal bars on the dashboard extend to both front doors, creating a harmonious sense that envelops the front-seat occupants.

There is nothing disjointed about the interior except for the center-console cupholders, which are cheap and flimsy and show the only evidence of high-gloss black plastic.

Materials, on the whole, are superb. The soft leather inserts in the doors are soft and supple, and the upgrade trim package (costing $450) consists of robustly colorful African rosewood.

Buttons and knobs are intuitive and raised slightly, adding flair and dimension to the instrument panel.

The cabin is extremely quiet, except when the dual-amplifier Bose Studio on Wheels stretches its woofers.

It’s not surround sound, but a 270-watt digital amplifier delivers power to 10 speakers through eight separate, individually equalized output channels. A second 104-watt amp powers the rear woofer.

Engineers from Bose, Infiniti and Burr-Brown (supplier of the digital audio converter) set out to achieve audiophile sound quality that resembles a live performance as closely as possible. They succeeded, using conventional 2-channel stereo to produce crisp highs, sparkling midrange and deep lows that are readily felt in the chest.

Available are either Sirius or XM satellite radio service.

The G35 is a lot of car for the money. Prices are $31,450 with a 5-speed automatic and $33,950 for AWD. A G35 Sport with 6-speed manual is $32,250 and with 5-speed automatic is $33,450, excluding $700 destination and handling charges.

Standalone options include satellite radio ($300), navigation ($2,100) and 17-in. chrome wheels ($1,440).

With expressive yet subtle styling, a sterling interior and a world-class powertrain, the G35 does everything asked of it – and more.

Infiniti isn’t saying how many G35s it plans to sell in its first full year, except that it will outsell the outgoing model.

Overall, the ’07 G35 is unabashedly Japanese (assembled at Nissan’s plant in Tochigi), yet wholly competitive on the world stage, a luxury-sport sedan ready to take on any challenger from Bavaria to Detroit – and all points in between.

tmurphy@wardsauto.com