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The Audi A3 is a premium car with excellent dynamics from superbly engineered engine, suspension, and braking systems. Yet it's fuel-efficient, with an EPA-rated 29 mpg Highway.

The Audi A3 is, essentially, a practical, compact five-door hatchback, but it feels up-market, like a scaled down A4. We like the A3 for its combination of open-road dynamism, long-haul friendliness, and around-town usefulness. The Audi A3 is an example of the exquisite sensibilities in design and use of materials that distinguishes the contemporary Audi.

Two models are available. The Audi A3 2.0T is powered by a turbocharged 2.0-liter four-cylinder driving the front wheels, while the A3 3.2 Quattro has a 3.2-liter V6 that drives all four wheels.

We found the A3 models offer superb balance and excellent throttle response that make for a convincing sports-car experience when the road is right. Inside, the Audi A3 is roomy and versatile, blending pleasing materials with logical controls and highly legible readouts.

Changes for 2008 are minimal. Most significant is the new Titanium package, which adds 18-inch titanium-finish alloy wheels (borrowed from the high-performance RS4), a black front grille, black interior headliner, and piano black interior trim. All 2008 A3s offer iPod integration.

Sales of the Audi A3 have been modest here in the U.S., but Audi has sold 1.5 million worldwide, including other body styles. So you may not see many on your block, but the A3 is quite popular in Europe. The A3 has earned accolades for its high levels of technology and sporty driving dynamics.

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All 2008 Audi A3 models sold in the U.S. are five-door Sportbacks. The A3 2.0 T is front-wheel drive with the 2.0-liter turbocharged four-cylinder engine rated at 200 horsepower. Two transmissions are available: six-speed manual or optional Direct Shift Gearbox (DSG) automatic. The A3 3.2 Quattro comes with all-wheel drive, a 250-hp 3.2-liter V6, and the DSG.

The Audi A3 2.0T ($25,930) and 2.0T DSG ($27,410) come with cloth upholstery; automatic climate control with pollen filter and sun sensor; power lumbar support; tilt and telescoping steering column; 10-speaker, 140-watt stereo with Sirius satellite prep; central locking with remote keyless entry; power windows; electronic cruise control; anti-theft alarm; two cupholders in the center console; and vanity mirrors in the sunvisors; Servotronic electro-mechanical steering; and 17-inch, five-spoke Star design alloy wheels shod with all-season radials.

The 2.0T Premium Package ($1,500) adds leather seating surfaces, 16-spoke bi-color alloy wheels, a storage package, trip computer, illumination package, power front driver's seat with four-way power lumbar adjustment, multifunction three-spoke sport steering-wheel, alloy shift paddles on cars with DSG, aluminum beltline trim, and front fog lights. The S line Package ($2,500) includes the Premium Package, plus special five-spoke quattro GmbH alloy wheels wrapped with 17-inch all-season radials, and sport-tuned shocks and stiffer springs to tighten up the handling; distinctive exterior touches include a roof spoiler, S line badges, and unique front and rear bumpers; aluminum door sills (with the S line logo), leather sport seats, and alloy trim upgrade the interior. The Audio Package ($1,350) adds Bose electronics, AudioPilot noise compensation, and Sirius satellite radio.

The Audi A3 3.2 Quattro ($34,915) includes all of the content of the S line Package and Audio Package.

Options for both models include a Cold Weather Package ($700) with heated front seats, removable ski sack, heated windshield washer nozzles and heated exterior mirrors. Various navigation packages are available, combined with an iPod interface ($1,950), 6-CD changer ($1,950), or with the 2.0T Audio Package ($2,950). Options for both models include the two-part Open Sky sunroof ($1,100); Bluetooth phone preparation ($435), heated front seats ($450), bi-xenon adaptive headlights ($800), 18-inch Five-arm alloy wheels with 225/40R18 summer tires ($1,000); Dark Walnut interior trim for 2.0T ($400); premium Vienna leather for 3.2 Quattro ($800), iPod interface ($250); rear side window sunshades ($150).

The Titanium package ($1,500) adds 18-inch titanium-color RS 4-style alloy wheels, a black front grille, black interior headliner, and piano black interior trim.

Safety features that come standard on all models include front and side-impact airbags for the front-seat passengers. All five seating positions get three-point seatbelts and an adjustable headrest, while front-seat headrests feature active technology to reduce whiplash injuries. The front seat belts feature height adjustment, automatic pre-tensioners, and belt-force limiters. Rear side airbags are optional ($350). Active safety features that come standard include electronic stability program (ESP); full-time traction control (ASR); ABS, EBD, and Brake Assist; an electronic differential lock (EDL).