I disagree. I have a 2008 A4, and it is a thoroughbred luxury car compared to most other cars that would have cost me the same money. Yes, the four-cylinder turbo engine makes a little more noise than a six, but it is still WAY more refined than any four-cylinder from Honda or Toyota, and I know because we have owned them all.
Although the A4 is built on the Passat platform, there are many noticeable differences between the two cars. One of my close friends owns a Passat, and although it is a tremendously nice car itself, there is a big difference in the materials inside and out, and my A4 does have more sound deadening, which is quite nice since the Passat is already a quiet car. We have both had great ownership experiences too.
I'd take maybe less "refinement" over reliability. Every single Toyota and Honda we've owned lasted at least 200,000 miles, with several going well over 300,000 miles without an issue. My Brother had a '98 Avalon, which was every bit as refined, had heated seats, power everything, and made it to around 320,000 miles before he sold it.
On the other hand, it seems that about every other person I know who has owned an Audi, VW, or any other number of cars like these, tends to have a lot of problems with them a few years after buying them.
I won't deny that Toyota and Honda build reliable products, as far as the power trains go anyway, but they have slipped in recent years. We had enough little annoying issues with a brand-new 2007 Camry to last a lifetime, and my aunt has a 2010 Accord that is giving her big problems with the brakes already at 45k miles.
The transmission in our Camry was always jerky, and the Toyota dealer outright said there was no fix for it, and that they all were like that until they introduced a six-speed for 2009 (thanks Toyota!).
We also had bits falling off of the Camry from the very beginning (rock guards, bumper panels), and the paint scratched quite easily. The radio display also failed early on, and the driver's door armrest caved in when the cheap plastic clips for it broke. The front windows also had scratches forming from where the mechanism was rubbing the glass.
Neither my old 1994 BMW 318i with 220k miles, nor my 2008 A4 with 76k miles, demonstrate the first squeak or rattle, which were rampant in our Camry on a cold morning, and present in my aunt's Accord on a recent trip I took with them.
Also, everything in my BMW and Audi has worked absolutely flawlessly, and nothing has fallen off. I knew the engine in the Camry would run forever, but I felt like the rest of the car was going to crumble apart within 10 years, and to me a car should still be in pretty good shape even at 10 years.
As far as the Avalon goes, it is a big step above a Camry. My same aunt with the 2010 Accord had two Avalons, and they were fantastic in every single way, but then again they were 1996 and 2000 models, which was back when Toyota made thoroughly excellent products. Toyota is finally bringing quality back from what it appears, but we have moved on to Hyundai for the time being, and are very happy with our Santa Fe that replaced the Camry!
My friend with the Passat 2.0T has had excellent service from the car, and she has had no faults with it, even though it is a 2006, which was the first year model of that body style. Her car still looks new, has crystal clear headlamp lenses (the ones on our 2007 Camry were already clouding up), and has spent less money on maintenance than she did with her old Grand Prix.
Maybe it's that we have good relationships with our private mechanic, and we research things to know what to look out for, but somehow I think it's more than just luck that we've had good service from our VW/Audi products. Even my cousin can't seem to kill her Audi Q7, and hers is a first year model (2007) that she is extremely rough on!
Some Honda and Toyota models had their part of issues with the transmissions, but generally speaking their engines are reliable and trouble free. That said, both Toyota and Honda use cheap suspension components in their vehicles, and it adds up to the bill after 60k miles. Generally speaking, a Toyota or Honda will start see the garage on a regular basis after 60k miles or so, usually for small but costly repairs. Usually wear items, such as suspension bushings, dust boots, tie rods, ball joints, exhaust components and a plethora of little wear things that are much more durable in European cars.