2005 Audi A3

Taking luxury brands downmarket is risky business. BMW and Mercedes-Benz are attempting to mine the discount rack, with varying levels of success. But even as Audi attacks its two German rivals at the top end of the market with the fabulous A8, it also wants in on more affordable segments and is finally giving us the new version of its excellent A3--which is anything but closeout merchandise.

Learning from BMW's 318ti experience, Audi is keeping its three-door Golf-based A3 hatchback out of our market. But the redesigned A3's five-door version has grown 3.3 inches longer and 1.2 inches wider, endowing it with an almost A4-size rear seat and a more vertical sport-wagonlike hatch, so the marketing dice-rollers have decided to bet on American acceptance.

Audi is sending the U.S. market two high-output engines. At launch in May 2005, a 2.0-liter direct-injection turbo four will mate to a choice of six speeds, manual or dual-clutch automated manual (DSG). Then in early 2006 a 3.2-liter VR6 DSG Quattro will arrive. The 2.0-liter 16-valve four-cylinder turbo engine will replace the 1.8-liter 20-valve turbo in all Audi applications. The five-valve head offered no room for the direct fuel injector, hence the reduction in valve-count.

This engine is named TFSI. In Europe, that stands for turbo fuel-stratified injection. Less stringent emissions regulations and superior fuel quality allow the engine to run "lean" in Europe--that is, with more than 14.7 parts air to each part of fuel. This saves fuel but increases NOx formation. In the U.S., the S in TFSI means "straight" as in "straight into the cylinder," but not at a lean mixture concentration, so we don't get quite the same fuel savings. We still derive the benefit of the fuel evaporating inside the cylinder, which lowers the charge air temperature so that the engine can operate at slightly higher compression ratios without suffering knock and thereby produce more power.

When Audi said the 3.2-liter DSG was coming here, too, we almost snapped our pencils. What else does one need to know? A Trabant with this hardware bolted into it would likely sell well, but with Audi's quality and Bauhaus styling, the A3's success is a sure bet.

The 2.0-liter four's combination of direct injection and a turbocharger--a claimed first--makes for a potent package generating 200 peak horsepower and 207 pound-feet from 1800-5000 rpm. It's well-matched to the slick six-speeds, towing the lithe A3's 2900 pounds around with ease spinning either the front wheels (without appreciable torque steer) or all four.