What's the difference between "all-wheel drive" and "four-wheel drive"?
As it turns out, "all-wheel drive" refers to vehicles that have permanently engaged or automatically engaging four-wheel-drive capability. "Four-wheel drive" implies the vehicle has manually engaging, temporary four-wheel drive. Your confusion is justified -- the auto industry, in their infinite wisdom, created these seemingly interchangeable terms.
What is four-wheel drive, exactly? According to a helpful 4X4 glossary* I jumped to from a link on Eliot's page, a four-wheel-drive vehicle has the ability to send power to all four wheels (not just the front two), giving the car more traction and stability. This helps when driving off road or on rough terrain.
Some current all-wheel-drive vehicles on the market are the Oldsmobile Bravada, the Toyota RAV-4, and the Mercury Mountaineer. If you're trying to decide between the two systems, Eliot suggests all-wheel drive over four-wheel drive: less hassle, better suspension, and better overall design. But he has a lot more to say on the matter -- read the whole article for the full skinny.
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