The trend in automobiles lately is big, literally. Bigger is better. Why then would Audi try to market a small luxury sport wagon (a.k.a. hatchback) in the land of plenty? The company is betting that a restless slice of the apple pie will gravitate to the A3's combination of driving fun, sensible footprint and nimble driving character. European buyers have no qualms with owning a small luxury hatchback.

The Audi A3 is based on the new Golf platform (which we won't see until later in 2006), but only the four-door hatch will be offered here. One glance at the A3 and it's clear the vehicle is Euro-inspired. The car's exterior proportions are roughly one-third greenhouse, two-thirds lower body, giving it a confident stance that reflects its European moniker: Sportback. The 2006 A3 is meant to expand the brand's appeal to entry-luxury buyers, age 25-40, by offering the sporty proportions of a coupe with the practicality of a wagon.

A pair of feisty power plants see duty in the Audi A3, including a turbocharged inline four and a muscular V6. Transmission choices include a six-speed DSG (Direct Shift Gearbox, which offers manual or automatic operation), and a six-speed conventional manual. With a starting price under $25,000, the A3 2.0T appears to be an upscale bargain. However, a series of attractive option packages can push that tab up around $30 grand, within spitting distance of an A4 Avant. Bigger is not necessarily better in this case, and if the 2006 Audi A3 can meet your needs for interior utility, expect a bargain of a luxury sport wagon.

The Audi A3 comes in one four-door hatchback body style, in either 2.0T or 3.2 quattro guise. The 2.0T's generous array of equipment includes 17-inch alloy wheels, dual-zone automatic climate control, one-touch power windows, keyless entry and a 10-speaker, 140-watt audio system with satellite preparation for both XM and Sirius. An optional Sport package provides stiffer suspension tuning, foglights, sport seats, aluminum interior trim, a roof spoiler and leather seating surfaces. The Premium package adds leather, a power driver seat, an auto-dimming rearview mirror, rain-sensing wipers and HomeLink. Other available extras include xenon headlights, a dual-pane power sunroof, a navigation system and an upgraded Bose sound system. Spring for the 3.2 quattro and both of those packages come standard, as does the Bose audio.

The heart of the front-wheel-drive A3 2.0T is a 2.0-liter turbocharged four-cylinder engine capable of 200 horsepower and 207 pound-feet of torque. It's enough to shoot the A3 to 60 mph in just 7 seconds. A six-speed manual transmission is standard, while Audi's six-speed sequential-shifting DSG (Direct-Shift Gearbox) is optional. Offering even more performance is the A3 3.2 quattro, which features Audi's 250-hp 3.2-liter V6 and the DSG transmission as standard. Audi claims a 0-60 time of 5.9 seconds for the 3.2 quattro.

A full complement of front and side airbags is standard on the A3, including torso-protecting side-impact airbags for front passengers, and head-protecting, full-length side curtains. Torso side airbags for rear passengers are optional. Four-wheel disc brakes with ABS and stability control are standard.

With 200 horsepower on tap, the 2006 Audi A3 2.0T is certainly no slouch on the road. The 2.0-liter four doesn't suffer from turbo lag, and the optional DSG tranny effectively reduces BMW's SMG, Toyota's SMT and Ferrari's F1-style transmissions to second-tier status with its smooth and fast gearchanges. The 3.2 provides even stronger acceleration, and drivers enjoy the same ultra-responsive DSG experience. The electromechanical steering does a superb job of dampening unwanted road vibrations and kickback without marring feedback, and the well-tuned suspension keeps the car buttoned down in the turns, even as midcorner pavement imperfections try to knock it off line. In typical Audi fashion, the ride is comfortably firm, and handling is just as sporty as its larger siblings.

The A3's interior features a classy combination of styling cues found other Audi cars like the TT, A4 and A6. Materials quality is excellent, and headroom abounds up front. The total interior volume is equal to the previous-generation A4 Avant, and despite the shortened cargo area behind the C-pillar you can still carry 13.1 cubic feet of luggage with the rear seat in place. Fold the 60/40 second row flat and cargo capacity jumps to 36 cubic feet.