In the Moto division, Marc Coma took another stage win to marginally extend his overall lead over KTM team-mate Cyril Despres.
Running between Antofagasta and Copiap, Stage 8 saw competitors tackle a mamouth 508km stage that provided no shortage of navigational challenges.
Al-Attiyah ran first on the road courtesy of his stage win yesterday, but was quickly caught by Sainz over the opening kilometers.
After the two Volkswagens ran together at high speed through much of the stage, Sainz struck disaster towards the end of the stage – twice getting stuck in the soft sand dunes.
“I hope that today will have been our worst day on the Dakar,” said a frustrated Sainz at the finish.
“At the end we got stuck in the dunes twice and both times we had to get out and dig.
“Sometimes everything's fine, other times it's not as good.
“Obviously, I've lost some time, but the rally isn't over, there are still other stages left”.
The end result was a six minute stage win for Al-Attiyah, seeing him take a five minute lead in the overall standings.
“We were really careful from the beginning,” explaind Al-Attiyah.
“Carlos caught up with us very quickly. In the last section of dunes we were pushing at a maximum because that was where we had to take the time from Sainz.
“It was a difficult stage because I was opening all the way, but the dunes are my favourite terrain and I was really pushing to the limit.
“But I'm happy to win the stage and take the lead in the general standings. I can control the race now”.
Giniel de Villiers and Mark Miller took third and fourth in their Volkswagens, with the result seeing the South African move ahead of BMW's Stephane Peterhansel in the overall standings.
It was another disastrous day for BMW, with Peterhansel suffering punctures for the fifth day in succession. The nine-time Dakar winner lost nearly 75 minutes to Al-Attiyah on the day's stage, and is now 93 minutes down overall.
Krzysztof Holowczyc had been BMW's second highest entry in the overall standings in fifth position, but also suffered a difficult day. Tyre, alternator and brake problems on the Polish driver's X3 saw him drop more than two hours to the Volkswagens.
The result sees Miller, recovering from a crash earlier in the rally, pass Holowczyc for fifth overall.
Marc Coma has cemented his overall lead by winning Stage 8.
The 508 km Special Stage saw the rally's top three riders, Coma, Cyril Despres and Francisco Lopez, ride together from the 30 km mark onwards.
Navigational difficulties quickly brought the three riders together, with each subsequently taking turns to lead the way.
While Coma won the stage, Despres reached the finish line marginally ahead of the Spaniard on the road after beating his rival across a navigationally challenging end to the stage.
“Today, the game was to stay right behind following in my tracks,” said Despres.
“Chaleco (Lopez) led the way on all the quick parts and I did the dunes.
“In the end, the satisfaction came from overtaking them and crossing the finishing line first.
“It's not much, but for a day like today it's a source of satisfaction.
“The problem with navigation is like in cycling some riders stick to your back wheel like leeches; well, there's the same thing in rally raids too.
“But that's just part of the game.”
With Coma beating Despres on the stage by two minutes, the gap between the two factory KTM riders now stands at nine minutes.
Lopez, beaten by four minutes on the stage, sits 22 minutes behind Coma in third.
Helder Rodrigues remains fourth in the rally after taking another fourth place stage result. The Portuguese rider is now 41 minutes off the rally lead.
Norwegian Pal Anders Ulevalsetter, who has struggled to transition from the 690cc to the 450cc KTM for this year, took his first top five stage result of 2011, beating home Ruben Faria, who remains fifth overall.
Winner of stage five, Paulo Concalves, crashed out of the rally on Stage 8, breaking his collarbone.
Jacob Smith finished an outstanding 19th on Stage 8 – losing just 55 minutes to stage winner Marc Coma across more than 500km of riding.
Smith has moved up one position to be 28th in the overall standings, while Simon Pavey gained five positions to be 59th after recording the 60th fastest time through the stage.
Geoffrey Olholm remains the sole Australian entry in the Auto division. The Rally Raid Desert Warrior sits 24th overall despite receiving a two hour penalty earlier in the rally.
Tomorrow will see a loop stage starting and finishing in Copiapo. The 235km Special Stage will take competitors back through the sand dunes of Chile. To add further spice to this stage, the bikers will set off in a grouped start, in rows of ten for the leading riders then in rows of 20.
CLICK HERE to view video highlights of the day's stage