WITH a starting point as good as the new-generation A3, Audi was unlikely to stuff up the hotter ‘S’ version.

But what we weren’t sure of was whether it could make its own compelling case in the face of the sublime offerings from Benz and BMW – or the likes of Mitsubishi’s Banzai Evo Lancer – at this, the relatively cut-price end of the market.

Audi has responded by paying emphasis to its native strengths – quattro AWD grip, punchy turbo engines and sublime attention to detail – but avoided adding any police-baiting lairy body kits, painful ride stiffness or narrow racing buckets.

Aside from the tweaked grille, menacing quad tailpipes and 18-inch alloys, you’d scarcely recognise an S3 for what it is, at least until you hear the 2.0-litre turbo breathing deeply with a blat of the throttle.

Paired to a six-speed dual-clutch auto with paddles, the force-fed powertrain fairly gallops up the gears with nary a trace of lag and with an understated but menacing and resonant burble. Matched to the sweet six-speed manual gearbox, it feels even livelier, though on paper its four-tenths slower to reach the tonne.

This ‘new’ engine features the same displacement (1984cc) as its predecessor, but is now 5kg lighter, 18kW/50Nm more powerful and more thermally efficient.

It’s also tilted further rearward by 11 degrees to improve weight distribution, with a front: rear split of 59:41.

The new model is 70kg lighter than before, thanks to the Volkswagen Group's new modular transverse MQB platform – the regular A3 was the first car to use it – and extensive use of aluminium in the bodyshell.

The lighter kerb weight translates to the S3’s more eager turn-in and pliable nature mid-corner. The MQB, though, could also use a little more sound-deadening in this instance, because road roar from the 225/40 R18 tyres is distracting on coarser-chip surfaces.

But gremlins beyond that are few and far between. The electromechanical steering loads up nicely as you pile on speed, and its linear action provides accurate feedback to the driver. The 25mm lower suspension keeps the S3 flatter in the bends than its already well tied-down A3 sibling, and on wet roads the quattro multi-plate clutch AWD system has plenty of traction.

Audi offers an ‘S performance package’ for $4990, which adds LED headlights, a Bang and Olufsen sound system, Audi’s ‘magnetic ride’ adjustable shocks, bigger-bolstered seats with a diamond stitch pattern, a different alloy wheel design and red brake calipers.

We wouldn’t bother, largely because the magnetic ride system doesn’t bring a great deal of benefit to the table beyond the fine ‘regular’ ride setting on the base car. The magnetic system offers three modes, with the comfort setting too soft and the racier setting too jiggly.

The bigger-bolstered sports bucket seats that come with the package are also a step down from their no-cost ‘inferiors’ because Audi ditches electric adjustment in favour of a manual.

The cabin is by-and-large a lesson to all others on how to merge sharp design – see the pop-up screen, rounded dials, transmission tunnel-mounted infotainment dial and sumptuous flat-bottomed wheel – and bulletproof quality and soft-touch tactility.

But on the other hand, there’s precious little stylistic difference in here to make the S3 stand out from a base A3 that’s almost half the cost. Perhaps the odd extra bit of aluminium here, some contrast stitching there might make a difference to the ambience ...

Still, there’s nothing wrong with the list of standard equipment. You get Xenon headlights with LED daytime runners, satellite-navigation, park assist with front/rear sensors and a reversing camera, and five-spoke 18-inch alloy wheel.

The cabin gets Nappa leather-clad electric sports seats, a BMW iDrive-style dial mounted on the console to steer through the multimedia interface, Bluetooth streaming, dual-zone climate control with rear vents, and a leather-wrapped, flat-bottomed steering wheel.

The S3, then, is a fine alternative to its racier, but perhaps rougher, rivals, because it offers nearly as much pace for much less money without skimping on equipment. And don’t underestimate the surety on a wet road provided by the quattro system.

It is a wolf in sheep’s clothing.