Nothing appeals more than a small, two-door hatch that'll haul the shopping, park easily in tight spots and go with more bang than a firecracker at Lunar New Year. The hot hatch is not a new concept by any means, but Audi's latest S3 takes the idea to new heights in power, price and refinement. The new S3 promises more power and equipment in a bigger body for a lower price than its predecessor. Audi enthusiasts will point to the subtle S3 changes that set it apart from the ordinary A3 - aluminium-look side mirror housings (a feature of the previous model), a single-frame grille, xenon headlights with daytime driving lights, a roof spoiler, and deeper front and rear bumper bars and side skirts. Twin oval rear exhaust pipe outlets round off the visual cues. The interior features silk nappa leather seats, aluminium-look pedals, gearknob and air vents, piano-finish dash, centre console and door inlays (brushed aluminium or birchwood are no-cost options). The S3 also has a Bose eight-speaker, 195 watt, MP3-compatible 6-disc in-dash stacker sound system, dual-zone climate control, cruise control and a multifunction steering wheel. There are plenty of safety features, including front and front side airbags, side curtain airbags front and rear, ABS brakes, stability and traction control, electronic brake-force distribution, electronic differential lock and brake assist. The successor to the original S3 is 55mm longer, 2mm wider, 16mm lower and has a wheelbase 59mm longer. Its interior is larger, with more rear legroom and extra shoulder room front and rear. The new S3 uses its own version of the Volkswagen Group's TFSI two-litre power plant, producing 195kW and 350Nm, improvements of 30kW and 70Nm over the 1.8-litre engine in the previous S3. Audi quotes a 0-100km/h time of 5.7 seconds and an electronically governed top speed of 250km/h. The S3's engine is also used in lower states of tune in various other VW Group vehicles, such as the Audi TT, A3 and A4, and the Volkswagen Golf, Jetta and Passat. It's hard to believe the two-litre four cylinder - admittedly with a rather big turbocharger fitted to it - develops 11kW more power than Audi's first modern V8, the 3.6-litre fitted to the 1988 Audi V8 quattro, which produced just 184kW. The engine has reinforced pistons, conrods, bearings and block to sustain the extra loads on it. The compression ratio is high for a turbocharged engine, at 9.8:1, and compared with the 147kW TFSI engine's 0.9 bar boost, a bigger turbo is bolted to the S3, producing 1.2 bar. After only a short drive you soon learn something about the S3: tucked under the smooth bonnet is an engine that is completely and utterly possessed. It can't be possible for it to be so tame and flexible at low revs and yet deliver such a thorough belting from mid-range on (once it hits about 3,000rpm, it turns the passing scenery into a blurred tunnel). With the slick, short-throw six-speeder and on-demand four-wheel drive system, there seems little problem getting the power down. I can't say engine performance is linear - its mid-range comes on way too strong for that - but the transition from low-rev toe tapping to mid-range head-kicking is subtle enough at least to allow you time to brace yourself. The car can be short-shifted around town or belted hard to its 7,000rpm cutout just as confidently. My only dislike is a metallic, hard-edged resonance creeping in at about 2,000rpm. The steering, like most power steering, feels artificial in feedback but response to input and weighting is spot-on. The flat-bottomed steering wheel, doing the rounds of VW Group cars, is a delight to twirl. While the S3's suspension has short travel and is firm, it still blots the worst of any sharp-edged potholes and picks its way through twisting, undulating bitumen with almost endless grip and close to neutral balance. There would have to be something strange going on if you couldn't have fun driving this car. If run-of-the mill premium small cars leave you cold, the S3 will certainly get you hot and bothered.