There aren't many cars on the market that are at once sporty, luxurious, fuel-efficient and relatively affordable. One member of this select group is the 2016 Audi S3 sport sedan, a higher-performance version of Audi's smallest and least expensive model, the A3.

With a sport suspension and plenty of power, the S3 provides crisper handling and quicker acceleration than its A3 sibling.

The S3 gets its extra zip from a modified version of the A3's available turbocharged 2.0-liter four-cylinder engine. It delivers a stout 292 hp, 72 more than the A3 2.0T can manage. Coupled with the standard six-speed automated manual transmission and all-wheel drive, it can fire you off to 60 mph in less than 5 seconds, yet it's EPA-rated at 31 mpg highway. You also get a sport-tuned suspension with optional magnetic-ride adaptive dampers for increased handling precision, larger brakes and various exterior styling mods that give the S3 a more aggressive look than the A3.

The S3's generously equipped interior is well-crafted and stately without being overdone. Like the A3, though, the S3 suffers from a tight backseat and small trunk, making it a questionable choice for families. It's also unfortunate that there's no USB port for connecting your personal devices; that's a feature we expect in every segment these days. And depending on your taste, the S3's sporty underpinnings may seem too stiff on rougher roads or poorly maintained city streets.

In fairness, the S3's primary rival, the Mercedes-Benz CLA45 AMG, has a similar list of foibles. The Benz boasts more power, but the Audi is less expensive and wins out in terms of personality and interior quality. If you can get by with two doors, we recommend the 2016 BMW 2 Series coupe, whose handling abilities are unmatched in this grouping. You could also save some money and go with the amped-up 2016 Subaru WRX STI or the well-rounded Volkswagen Golf R hatchback (which is mechanically very similar to the S3). Overall, though, if you like the idea of a small luxury sedan that packs a big punch, the 2016 Audi S3 is a great pick.

The 2016 Audi S3 is a higher-performance version of the A3 compact luxury sedan. It's offered in two trim levels: Premium Plus and Prestige.

Standard features for the Premium Plus include 18-inch wheels, summer performance tires, keyless ignition and entry, selectable driving settings (known as Audi drive select), automatic xenon headlights, LED daytime running lights and taillights, automatic wipers, a panoramic sunroof, dual-zone automatic climate control, heated front seats, eight-way power front sport seats (with four-way lumbar adjustment), driver memory settings, a tilt-and-telescoping steering wheel, leather upholstery, 60/40-split folding rear seatbacks, an auto-dimming rearview mirror, Audi's MMI electronics interface (with a console-mounted controller and a power-retractable display), Bluetooth phone and audio connectivity, a rearview camera, front and rear parking sensors and a 10-speaker sound system with a CD player, an SD card slot, Audi's proprietary digital music interface (with an iPod cable), HD radio and satellite radio.

The Prestige adds an LED Lighting package (LED headlights and interior lighting), heated power-folding exterior mirrors with driver-side auto-dimming, a 14-speaker Bang & Olufsen sound system, adaptive cruise control, active lane departure intervention, a forward collision mitigation system and a Technology package (bundling a blind-spot monitor, an upgraded MMI system with an improved display and a touch-sensitive controller, Audi Connect online services with 4G LTE mobile WiFi, smartphone-app integration, voice controls and a navigation system).

The LED Lighting package, Technology package and Bang & Olufsen sound system are available as options on Premium Plus models.

Optional on both the Premium Plus and Prestige are a Performance package (19-inch wheels and adaptive suspension dampers), a Black Optic Performance package (bundling the adaptive dampers with different 19-inch wheels and black exterior trim), a Sport Seat package (manually adjustable sport seats and premium leather upholstery), rear-seat side airbags and 18-inch all-season tires.

The 2016 Audi S3 is powered by a turbocharged 2.0-liter four-cylinder engine that produces 292 hp and 280 pound-feet of torque. All-wheel drive and a six-speed automated manual transmission (called S tronic) are standard.

With nearly 300 horsepower available, the 2016 Audi S3 excels at quick getaways.

In Edmunds track testing, an S3 leapt from zero to 60 mph in just 4.6 seconds using the car's integrated launch-control system. That's quick for any car in this price range, and a tenth of a second quicker than the costlier CLA45 AMG.

EPA-estimated fuel economy checks in at 26 mpg combined (23 city/31 highway), a satisfying result given the S3's swiftness.

The 2016 Audi S3 comes standard with antilock brakes, traction and stability control, front-seat side and knee airbags, side curtain airbags, a rearview camera and front and rear parking sensors. The Prestige trim adds active lane-departure intervention, a blind-spot monitor and a forward collision mitigation system with automatic braking.

Premium Plus models can also be optionally equipped with the blind-spot monitor (via the Technology package), while rear-seat side airbags are optional for both trims.  

In Edmunds brake testing, an S3 with the optional 19-inch tires stopped from 60 mph in 107 feet, a sports car-quality distance.

In government crash tests, the structurally similar Audi A3 sedan was awarded the top five-star rating overall, including four stars for total front-impact protection and five stars for total side-impact protection. The independent Insurance Institute for Highway Safety (IIHS) gave the A3 sedan the highest possible rating of "Good" in its small-overlap frontal-offset, moderate-overlap frontal-offset, side-impact and roof-strength crash tests. The A3's seat and head restraint design was also deemed "Good" for whiplash protection in rear impacts.

The 2016 Audi S3's turbocharged engine provides smooth and quick acceleration. It won't pin you to the back of your seat with outrageous power, as you might find in one of Audi's hard-core RS models, but there's a clear difference between the S3 and its less powerful A3 sibling. The automated manual transmission is also on point with its timely and quick shifts.

The S3's steering is exceptionally responsive and precise, which is welcome news for driving enthusiasts. Every S3 feels agile and light on its feet, but the optional adaptive suspension is a worthwhile upgrade with its choice of Comfort, Auto and Dynamic modes. The latter mode provides additional stiffness for sharper handling, keeping body roll in the corners to a minimum. Note, however, that the S3's ride is pretty firm even in Comfort mode, and the optional 19-inch wheels don't help matters. We suggest sampling both wheel sizes to determine how much firmness you can handle.

Up front, the S3's well-bolstered sport seats provide good support for aggressive driving, yet they're also comfortable on longer drives. As part of Audi's smallest sedan line, however, the S3 isn't all that roomy. Front passenger space is adequate, but rear legroom is pretty tight for adults, although the S3 does have more rear headroom than the CLA45 AMG. As for the S3's 10-cubic-foot trunk, it's fine for daily errands and such, but packing for a long road trip could push its limits. Fortunately, the rear seatbacks fold down in a 60/40 split to provide some versatility.

The Audi S3's nicely contoured front sport seats are comfortable and supportive.

There's little fault to find with the S3's overall design, however. Though some may prefer flashier cabins adorned with swaths of wood or metal, the S3 is beautiful in its simplicity. It's also chock full of high-quality materials and intricate details, including jet-engine-inspired air vents, finely crafted switchgear and the fluid action of the MMI display as it rises smoothly from the dash and then lowers again when turned off.

While every S3 includes that screen, cars with the navigation system use a larger display and an advanced rotary controller with a touchpad on top. The touchpad allows you to scribble with your finger when entering a destination or jumping to a certain letter in your contacts list, for example, as well as use smartphone-style swipe commands. It's cool and it works. Regardless of the MMI version, however, controls for the stereo and other systems may take some time to get used to, especially if you're used to a car with traditional dash-mounted buttons. That issue will resolve itself with time, but the same can't be said of Audi's proprietary iPod interface, which isn't nearly as versatile as a USB port.