Only a few years ago, the automotive engineering community would have scoffed at the idea of a V-8 made by Hyundai Motor Co. Ltd. being named one of Ward’s 10 Best Engines.

The idea of a Hyundai engine being the only V-8 on the list would have been unthinkable.

But that was before the Hyundai Genesis sedan, the auto maker’s first foray into the U.S. luxury market, began winning critical acclaim and sales success in the U.S. The Genesis was named North American Car of the Year in January 2009.

Only a few days after winning the NACOTY award, the Genesis’ Tau V-8 received a Ward’s 10 Best Engines nod for the first time, sharing V-8 honors with Chrysler Group LLC’s legendary 5.7L Hemi V-8.

Last year, Hyundai also was one of only three auto makers to report an overall gain in sales in the U.S., with 435,064 vehicles sold, according to Ward’s data. Most other auto makers saw double-digit losses.

Now the Tau engine has won a spot on the Ward’s 10 Best Engines list for the second year in a row, and this time it is the only V-8. Clearly Hyundai is on a roll.

But while the South Korean auto maker’s success in the premium car market may seem sudden, it has been a long time in the making, especially in powertrain.

Hyundai employs 8,000 engineers and scientists at its Namyang research and development center outside Seoul.

Opened in 1996, it is a huge complex full of frantic activity and big aspirations. It also has the resources to help fulfill big ambitions. Namyang’s engine-development center boasts 250 dynamometers, among the largest clusters of such testing equipment in the world.

As an engine designer, Hyundai Vice Chairman H.S. Lee says he dreamt for years of creating a world-class V-8 to replace the dated engine in the auto maker’s flagship Equus sedan, an old 4.5L Mitsubishi Motors Corp. design that made only 270 hp.

Before becoming vice chairman and president of Hyundai’s corporate research-and-development division, Lee headed powertrain development and oversaw the design and engineering of the auto maker’s recent powertrains, including the Tau V-8.

Lee clearly has a close emotional connection with the Tau. He flew from South Korea for the second year in a row to personally accept the Ward’s 10 Best Engines award. And emotion, feeling it while you are developing a powertrain, and experiencing it while you are driving a car as a consumer, is what Ward’s likes to say its engines competition is all about.

But in an interview, Lee points out emotion sometimes has to be kept in check, because performance cannot always come first.

The most difficult decisions made during the Tau’s development revolved around balancing all parameters, Lee says. Some of the technologies he originally hoped to employ could not be accommodated. “Compromise is the engineer’s destiny,” he says.

Even so, Lee says 95% of the goals for the Tau engine were achieved. “Some of the good technology was too much for us to afford, cost-wise or manufacturability-wise,” he says. But the engine still fits the premium nature of the Genesis and Equus luxury sedans.

Indeed it does. In a car that starts at about $40,000, the Tau offers the kind of smoothness, creamy torque delivery and authoritative exhaust note you expect from an engine in a car with a sticker well above the 10 Best Engines competition price cap of $54,000.

The 4.6L Tau also is perfectly at home in the more expensive Genesis-based Equus sedan, which debuts in the U.S. later this year (U.S. pricing has not been announced). Ward’s editors had a chance to take it for a quick test drive last summer.

With a specific output of 84 hp/L, the Tau easily bests most naturally aspirated V-8s found in much more expensive German and Japanese luxury cars, as well as highly respected Detroit V-8s such as the Hemi. It’s an achievement noticed by more than just Ward’s editors.

“Comparing it to the V-8 engines in the BMW 5-Series, Mercedes E-Class, Cadillac STS, Audi A6 and Infiniti M45, the Tau has the best fuel economy and the highest specific output. Audi matches it for specific output of 84 h/L, but the Audi engine is only 4.2L and has less power and torque.

The E-Class has the most power and torque, but also by far the biggest engine (5.5L),” says Michael Omotoso, senior manager-global powertrain automotive forecasting, J.D. Power and Associates

Despite its power, the Tau also delivers excellent fuel economy, considering the size and weight of the Genesis sedan: 17/25 mpg (13.8-9.4 L/100 km). It also happily burns regular gasoline without complaint, although there is a sacrifice of about 7 hp and 9 lb.-ft. (12 Nm) of torque.

“The fact the Tau only needs regular fuel is a big plus,” Omotoso says. “So you save money by using regular fuel instead of 91 or 93 octane, and you also save because the Hyundai has the best fuel-economy ratings, not to mention the lowest sticker price for the vehicle. (Hyundai) is offering luxury performance at a middle-class price.”

Dean Tomazic, vice president-Engine Performance and Emissions Div., FEV Inc. also says fuel efficiency is one of the Tau’s most impressive features. He points out the much smaller 4-cyl. Subaru DOHC H-4 boxer on this year’s 10 Best gets only slightly better mileage of 18/25 mpg (13-9.4 L/100 km).

“With fairly conventional technology, they have optimized everything to achieve those numbers,” Tomazic says, adding when Hyundai decides to add direct-gas injection, variable valve lift and cylinder deactivation, it will add a lot more benefit in terms of meeting future emissions targets and improving efficiency overall.

And Lee makes it clear Hyundai does not plan to sit on its laurels. “Pretty much every year we will make some improvement,” he says, although he declines to give specifics.

For the ’10 model Genesis, engineers added another 10 hp, bringing total output for the Tau to 385 hp. It already has a 2-step variable induction system and dual continuously variable valve timing. Direct injection, variable valve lift and cylinder deactivation all are expected to be added in the future.

Lee says Hyundai definitely will add GDI to the Tau at some time, but says the auto maker also is focusing on improving small things as well, such as further minimizing friction and thermal losses, in order to improve fuel economy.

But he is cagey about where displacement will go on future versions of the engine. “We have 4.6L and 5.0L. We are very flexible,” he says. “We will find the best solutions to meet our customers’ requirements, but we do not want to lose fuel economy.”

The 5.0L V-8 makes 395 hp and 369 lb.-ft. (499 Nm) of torque and is designed for the long-wheelbase version of the Equus flagship sedan for the Korean market. The stretch Equus gains 11.8 ins. (30 cm) in both length and in its wheelbase compared with the standard Equus. It is designed to compete against the Lexus LS 460L and Mercedes S500L.

The long-wheelbase Equus, which is not expected to be U.S.-bound, will cost the equivalent of $113,000-$122,180.

The Tau is a compact premium V-8 with class-leading power density, fuel-efficiency and refinement that is up to any assignment, from powering a $40,000 sedan to one that costs three times as much. We could say it just doesn’t get any better, but we know it will, probably every year.