AUDI’S M3-taunting RS5 Coupe has arrived in Australia, packing a rev-happy 331kW 4.2-litre V8 good for 8500rpm and a claimed zero-to-100km/h sprint time of just 4.6 seconds.

Customers wanting Audi’s new performance spearhead will, however, pay a premium for the privilege, with the two-door coupe going into Audi showrooms in October from $175,300.

That is $17,000 more than BMW’s $158,300 M3 Coupe and a substantial $24,320 over Mercedes-Benz’s closest natural rival, the $150,980 C63 AMG sedan.

Like its competitors, the RS5 employs a normally aspirated V8, which Audi is a upgraded version of the same-sized V8 that powered the RS4, but, unlike the rival rear-wheel-drive bahnstormers, offers all-wheel-drive grip via the latest version of the company’s acclaimed quattro system.

Audi said its all-paw RS5 will take the performance fight right up to its more established rivals, with a 4.6-second sprint time to match the 309kW BMW M3 (4.6s in auto form, 4.8s in manual) and just shy of the 336kW auto-only Benz C63 (4.5 seconds).

Audi is also claiming the moral high ground on fuel economy, saying its latest coupe drinks 10.8 litres per 100km, compared with the M3’s 11.9L/100km for the manual and 12.4L/100km for the auto, and the C63’s thirsty 13.5L/100km.

Built specifically by the Volkswagen-owned car-maker to take the battle up to the M3, the RS5 sits 20mm lower than the standard A5 coupe, with bulging wheelarches reminiscent of the original 1980 Audi Quattro.

The front is dominated by gaping air openings and a red-tipped RS5 badge, while at the back business-like twin chrome-tipped exhausts sit either side of a diffuser that is on the tail-end of smooth, aerodynamic underbody cladding.

A rear spoiler recessed into the boot lid extends automatically at 120km/h – or by the push of a button at other times – and retracts again when the speed drops below 80km/h.

Chunky 19-inch alloy wheels with 265/35 rubber fill the wheelarches, while 20-inch wheels with 275/30 tyres are available if you want more.

But the star of the RS5 show is the powertrain, led by the hand-built 4.2-litre direct-injection V8 that weighs just 216kg thanks to aluminium-silicon casting that Audi claims makes the engine more durable as well as lighter.

Producing 22kW more than the similar-sized V8 in the RS4 that disappeared from the Australian market in 2008, the latest version of the 90-degree, long-stroke FSI V8 generates peak power of 331kW at a stratospheric 8250rpm, before the rev-limiter shuts down the fun at 8500rpm.

Peak torque of 430Nm – superior to the M3’s 400Nm but way short of the big-bore C63’s 600Nm – is achieved between 4000rpm and 6000rpm.

Like most German high-performance cars, top speed is limited to 250km/h, but Audi’s technicians are prepared to tweak it to shift the electronic bondage out to 280km/h.

A bi-modal exhaust system has a bypass flap in each of the twin exhausts for both performance and aural pleasure. This operates automatically when the driver gives the engine a vigorous work-out, or manually with a push-button control.

If that is insufficiently raunchy, a sports exhaust system can be had for an extra $2600.

The engine is mated exclusively to Audi’s dual-clutch seven-speed S-tronic automated gearbox – the first time this ’box has been matched to an RS model.

Audi says the transmission can handle up to 9000rpm, but it has nevertheless tweaked aspects such as the clutches and oil management system.

A taller seventh gear helps to reduce fuel consumption, as do a low-drag energy-recuperating alternator, on-demand oil pump and low-friction cylinder bores.

The new quattro all-wheel-drive system uses a new, lighter (by 3kg) and more efficient crown-gear centre differential, which is said to shift the driving force between the front and rear axles “in the blink of an eye”.

While the default setting is biased 60 per cent to the rear wheels, it can deliver as much as 85 per cent of the power to the rear or as little as 30 per cent, depending on grip.

As well, a torque vectoring system helps to control slip by braking wheels under light load while a new sports rear diff splits the drive between the rear wheels, pushing most to the outside wheel to help overcome power oversteer and understeer, and delivering what Audi describes as “riding on rails” handling.

As with other Audi sports models, RS5 drivers can select from three modes – comfort, auto and dynamic – to adjust the steering, transmission, accelerator and exhaust according to requirement.

From 2011, buyers will also have access to dynamic dampers from the RS6.

No fewer than eight pistons grace each of the black-painted, RS-monogrammed front brake callipers that bite into 365mm ventilated discs (324mm at the rear). For those wanting the full braking experience, 380mm ceramic discs are also offered.

The four-seat RS5 gets a unique black or silver interior treatment, featuring high-sided sports seats in either black or silver Nappa leather with integrated headrests bearing the RS logo. Like the seats, the headlining can be either black or silver.

The cabin is liberally sprinkled with piano black, aluminium and carbon-fibre surfaces.

The driver information system includes a lap timer and oil temperature gauge, while sat-nav is standard, along with a panoramic sunroof, three-zone climate control air-conditioning, parking system, xenon headlights with dynamic cornering and auto high-beam-low-beam control.

Among the options is a 505-watt Bang & Olufsen 14-speaker audio system, with a TV tuner.