Over the decades, Audi has invested more in technical innovation than most car makers. The firm's quattro four-wheel-drive system was groundbreaking, and it also pioneered aluminium construction techniques. With this in mind, it seems ironic that Audi's most important innovation came from the simple decision in 1996 to put its name to a small, front-wheel-drive hatchback.
Although the car shared its underpinnings with the VW Golf, the A3 represented an affordable first step into the world of prestige model ownership and has been a sales success.
Seven years on, Audi is set to shake the compact car market again, this time with its all-new A3. Initially available in three-door form only and expected to go on sale in mid-June, it has a chunky, broad-shouldered look that gives it much more visual presence than its predecessor.
The arrival of the new model also marks the end of the road for the 1.8T engine. Its replacement is the hi-tech 2.0-litre direct-injection petrol FSI unit driven here, which is already in active service in the A4 saloon. The FSI produces similar pulling power - 150bhp and 200Nm at 3,500rpm - but offers greater fuel economy and significantly reduced exhaust emissions.
What's more, the throttle response feels immediately sharper, especially at low revs, and as the needle climbs to-wards the limiter, the engine takes on an energetic feel that encourages en-thusiastic driving. It sounds sporty, too, producing a deep-chested rasp from its twin-tailpipe exhaust system at high revs.
If there is a weak link, it's the gearbox. As with all models bar the five-speed 1.6 FSI, our test car had a six-speed manual as standard. There's nothing wrong with the ratios - the first five are relatively short for acceleration, with sixth being quite long for economy and refinement on the motorway - but it suffers from a 'clunkiness' that hinders fast changes.
On the road, the difference between old and new A3 is obvious. Whereas the outgoing model shared its major components with the current Golf, this latest A3 uses the platform of the next-generation VW. The chassis is taut, tightly controlled and virtually immune to body roll. It also feels as stable at speed as Audi's A8 limousine. The electro-mechanical power-steering is a revelation; precise, perfectly weighted and hampered by none of the slackness off dead centre that afflicted the old model's. It can't quite match the BMW Compact for feel, and the chassis errs towards gentle understeer at the limits of adhesion. However, Audi's firm but supple suspension strikes an exceptionally good balance between body control, ride comfort and refinement, and the A3 is a highly accomplished long-distance cruiser.
So unless having a saloon is your top priority, there is little incentive to stretch to the price of an A4. TT-inspired detailing such as centre console strut braces and round air vents give the newcomer a visual edge over anything BMW or Mercedes has to offer, and the cabin resets the build quality parameters in this class. The A3 is no slouch in the practicality stakes, either. Because the wheelbase is significantly longer and wider than the outgoing car's, this allows 29mm of extra kneeroom and 30mm of additional shoulder space in the back. The bulky transmission tunnel needed to accommodate the quattro four-wheel drive means the Audi is a four-seater, but no other premium hatchback feels as spacious inside. Standard safety aids include Brake Assist and curtain airbags.
Although it might not offer major advances in technology, the new A3 does move the small executive car market a significant step forward.
* All-new Audi A3 on sale in the UK from June 2003
* Will be available with a three-door body only initially