AUSTRALIA’S premium small-car market is on fire at the moment. Overall sales in the segment are up by a massive 67 per cent to the end of August compared to the same period last year.

In fact, a quick glance at the VFACTS sales figures for the first eight months of 2013 suggests it has experienced a bigger increase than any other segment.

It’s been a very busy year in that marketplace with Mercedes-Benz launching its A-Class sales juggernaut in March and Volvo pushing for more volume with its V40 hatch range that arrived in February.

Audi came slightly late to the party with its all-new A3 Sportback range in May, but it has made up for lost time with strong month-on-month sales, chasing Benz and even bettering the BMW 1 Series in August.

Audi’s Australian arm is banking on even higher sales with the introduction of two new variants this month – the 1.4 TFSI with fuel-saving Cylinder on Demand (CoD) technology and the 1.8 TFSI with Quattro all-wheel drive.

Both models are based on variants that already exist. The inclusion of the fuel sipping technology and all-wheel drive naturally comes with a price increase.

The 1.4 TFSI with CoD offered in base Attraction spec at $37,900 plus on-road costs is $2300 more expensive than the original, while the 1.8 TFSI Quattro adds $3000 to the cost of the two-wheel drive version for a price of $45,500.

For the money, the fuel efficiency focussed 1.4 TFSI includes 16-inch alloy wheels, reverse parking sensors, dual-zone automatic climate control, dynamic suspension, leather-wrapped steering wheel, a pop-up colour display, paddle shifters and Bluetooth connectivity.

The 1.8 TFSI Ambition adds 17-inch alloys, aluminium window surrounds, Audi Drive mode select, front fog lights and front leather-appointed sports seats.

Audi is one of a number of European car-makers that offers a suite of options across its model range that can easily push the price of the car out by thousands of dollars.

Audi says it has consolidated its optional features list for the third-generation A3, and now offers 13 individual options, down from 27 in the superseded model.

A lot of options are now grouped together in packages, and there are now five of these to choose from, up from two in the previous A3. Both vehicles tested were optioned up with a number of packages.

The 1.4 TFSI CoD featured the Technik package which includes sat-nav, park assist and a reversing camera for $2990, the Style package with 17-inch wheels, Xenon headlights and LED daytime running lights for $2000, the Assistance package with adaptive cruise control, Audi’s Pre-sense collision warning system and lane-departure warning for $1800.

All of this plus the $1350 optional Milano leather added $8050 to the $37,900 recommended retail price.

The Technik and S line sports packages added to the 1.8 TFSI Quattro hiked the price up by even more, with an $8240 increase to $53,740.

To be fair, a number of major competitors, including the BMW 1 Series, also offer a similarly dizzying array of options for a price.

Audi’s unmatched reputation for creating beautiful cabins, regardless of the size or price of the vehicle thankfully continues with the A3 Sportback. The 1.4 TFSI CoD features a lovely two-tone colour scheme with the luxurious leather seats contrasting beautifully with the dark-grey soft-touch materials of the dash.

The compact proportions of the A3 give a cosseting feeling and visibility is excellent at all angles, while the boot features best-in-class capacity of 380 litres with rear seats up and 1220L when folded.

Put your foot down in the eco-friendly hatch and there is a hint of turbo lag from the Volkswagen Group’s 103kW/250Nm 1.4-litre turbo-petrol engine, but once you move past it, the Audi gives solid straight-line performance. Audi claims it is good for the zero to 100km/h dash in 8.4 seconds and we have no reason to dispute that.

We’ve remarked before that the new A3 is a dynamic leap over the old one. It may lack the rear-drive playfulness of a 1 Series, but it has sharp turn-in, excellent body control and quick electric steering.

The seven-speed DSG produces smooth changes and is well-matched to the sprightly little engine – those kinks are being increasingly ironed out as time goes by.

Audi chose not to include the monitor highlighting when the cylinder deactivation kicks as they do with the more up-market S6, S7 and S8 models, so there is no way to tell when it is operating.

Keeping an eye on the revs gives you some idea, as the system starts at around 1300 to 3900rpm and cuts out cylinders two and three when coasting and at low speeds to improve fuel use.

Official fuel consumption for the 1.4 TFSI CoD of 4.7 litres per 100km is best in class for petrol models, and a 0.3L/100km improvement on the regular version.

Our brief drive through South Australia’s McLaren Vale region returned figures of 7.0L/100km.

The 1.8 TFSI Quattro’s cabin is bathed in darker colours than the 1.4 TFSI and replaces the standard front leather seats with Alcantara and leather trim front sports seats. It also gains a lovely chunky three-spoke sports steering wheel.

The 132kW/280Nm 1.8-litre turbo TFSI Quattro is noticeably gutsier than its less-powerful sibling and putting a foot to the floor produces a swift reaction and a nicer engine note.

Audi’s Quattro all-wheel drive system adds extra traction and helps jolt the little German off the mark. While Benz offers AWD on high-end performance version, having such a system this far down the range gives Audi a welcome point of difference.

The suspension set-up kept the car balanced through corners, while potholes and bumps were handled without any drama on our drive through wine country. Our test car had a drive select system, with a firmer damper tune able to be dialled in.

We managed fuel economy of 8.0L/100km, which is more than the official figure of 6.6L/100km – but then, economy was not our main aim on this short drive leg.

A 0-100km/h sprint time of 6.8 seconds gives the 1.8 TFSI Quattro official ‘warm-hatch’ status and our time in it supports that. It certainly builds anticipation for the hotter 206kW/380Nm S3 Sportback that arrives in local showrooms in December.

Audi is hoping to appeal to eco-conscious buyers in the premium small car segment with the 1.4 TFSI, although the $2300 premium for such a minor improvement to fuel efficiency and some small performance improvements is a fair hike.

The 1.8 TFSI Quattro on the other hand is a worthy addition to the already solid A3 Sportback line-up, and while it doesn’t quite have the performance figures of an all-out hot hatch, it offers just enough bang for your buck to end up on a few shopping lists.