MENLO PARK, CA – For luxury-vehicle makers, the move down market is problematic.

Expanding into lower-cost segments where a growing cadre of more budget-minded new-car buyers is longing for entree to premium brands means trying to find a way to whittle down costs without cutting back on DNA-critical attributes.

Audi takes another crack at devising a winning formula with its all-new A3, which this time comes to the U.S. in a more market-palatable sedan configuration (no more hatchback for now) that is well equipped and priced to sell against fully loaded, more mainstream Honda Accords and Ford Fusions, not to mention new entry-level models from rivals Mercedes and BMW.

Are there some corners cut? Most definitely, particularly on the inside, where Audi long has been considered the industry bar-setter.

But there also are many characteristically Audi touches that help maintain the A3’s connection to the brand, especially for those buyers willing to check off a few options.

The new A3 rides on Volkswagen’s soon-to-be-ubiquitous front-drive MQB platform that also underpins the ’15-model Volkswagen Golf and is offered with VW’s EA888 1.8L and optional 2.0L TSI gasoline engines.

Although the $29,900 A3 is the smallest car in Audi’s U.S. lineup, it’s no longer that small. At about 11 ins. (279 mm) shorter overall than the current A4, it actually is nearly spot on with an A4 of a decade ago in wheelbase and less than 4 ins. (102 mm) shorter in overall length, meaning cabin space is reasonably generous upfront and adequate in the rear.

Despite its more conventional sedan body style, Audi has managed to make the car’s exterior fairly compelling. Like a lot of 4-door models today, the A3 is designed with more of a coupe sensibility, with its rearward-leaning roofline, integrated rear spoiler and character lines that run between the wheel wells on an upward slant from front to back.

Designer Dany Garand says the objective was to evoke the image of a “tailor-made dinner jacket,” not flashy but a perfect fit for the road, and that mostly was achieved by the car’s taut, clean lines.

Cabin Spare But With Some Audi Touches

The styling objective inside was met too, but not with as rewarding a result. Garand says the target was a Bauhaus theme of “clear, logical and timeless” design, but with more sensuality than the sterility that architectural movement implies. But the A3’s stepped-down materials, combined with its uncluttered appearance, may be a little too sparing for some.

However, there are some Audi-like touches that dress things up a bit, such as the aluminum accent trim along the doors, dash, vent surrounds, gearshift and center console and the brand’s characteristic sport gauge/information-screen combo. Also available is Audi’s well-honed MMI system, complete with optional touchpad-based handwriting-recognition technology.

The tiered instrument panel also adds a little life, and the retractable navigation/MMI screen that rises out of a slot in the dashboard when the car is started is a clear winner. The round air vents inject a sporty flair that pairs the sedan more closely with the upcoming TT sports car than the more luxury-oriented A4 sedan.

There are myriad ways to drive the A3 further up the value chain, if you don’t mind nudging the car’s price into A4 territory. Options include pushbutton start; navigation system with voice recognition and Google Earth graphics; rearview camera; adaptive cruise control; full LED headlamps; a 705-watt, 14-speaker Bang & Olufsen premium sound system; and 18- or 19-in. 10-spoke wheels to replace the standard 17-in. 5-spoke wheels.

Safety equipment includes eight standard airbags and optional collision brake assist, lane-keeping assist and side assist. Pre-sense basic, which anticipates an impending collision and tightens seatbelts and prepares the vehicle for a crash, is standard.

One of the advantages of the A3’s infotainment system is that it is upgradable. Working with processor-supplier NVIDIA, Audi says it easily will be able to update the system with more powerful electronics over the lifecycle of the car.

The A3 also is offered with Wi-Fi connectivity via two different subscription levels: $99 for 6 months/5 GB or $499 for 30 months/30 GB.

The A3 options are grouped into a couple packages: Premium-plus, centered around upgraded wheels and trim for $2,550, and Prestige, including navigation, high-end sound system and more for $8,450, taking a fully loaded model north of $40,000.

Driving through the hills and along the coast here reveals both powertrains are adequate, but the base 170-hp 1.8L that plays so well in a lower-priced and manual-equipped Jetta (a 2014 Ward’s 10 Best Engines winner) is a bit lacking in an automatic-equipped car with four rings emblazoned on the grille.

The 220-hp 2.0L (base price $32,900) tested here with standard quattro all-wheel drive is much more suited to the entry-luxury-sedan task, although it too suffers a little turbo lag and its dual-clutch automatic, geared lower for better jump off the line, still hunts around a bit for the right gear. But slip it into manual-shift mode and punch the throttle and the A3 responds with plenty of top-end power.

Audi says the 2.0L quattro knocks 1.4 seconds off the car’s 0-60 mph (97 km/h) time compared with the 1.8L, getting you there in just 5.8 seconds. Premium fuel is recommended with either engine.

Like most Audis, the entry sedan performs a nice balancing act between ride, fuel economy and performance. What the car lacks in all-out power and top-speed handling it makes up for in fuel efficiency and ride comfort. If you are seeking something skewed more toward performance, buy the new 210-hp Volkswagen GTI instead.

An optional sport suspension is coming, which will hunker down the car closer to the road and presumably allow it to work its way through the twisties more quickly. An S version equipped with a higher-output version of the 2.0L (290 hp in Europe) due in the fall and potentially even available with a manual transmission likely will take that up another notch, but neither model was offered here for testing.

Overall, the new A3 comes pretty close to hitting its mark. There now are several mainstream cars that offer more room, more content and higher style both inside and out.

But if you just gotta have that luxury label, the A3 could do the trick – particularly if you can afford a few of the extras.

’15 Audi A3 Specifications

Vehicle Type Front-engine, front-drive 5-passenger, 4-door sedan
Engine 1.8L TFSI direct-injected DOHC iron block/aluminum head turbocharged 4-cyl.
Power (SAEnet) 170 hp@4,500-6,200 rpm
Torque 200 lb.-ft. (271 Nm) @1,600-4,000 rpm
Bore x stroke (mm) 82.5 x 84.1
Compression ratio 9.6:1
Transmission 6-speed dual-clutch automatic
Wheelbase 103.8 ins. (2,637 mm)
Overall length 175.4 ins. (4,456 mm)
Overall width 77.2 ins. (1,960 mm)
Overall height 55.7 ins. (1,416 mm)
Curb weight 3,175 lbs. (1,440 kg)
Base price $29,900, plus $895 destination fee
Fuel economy 23/33 city/highway (10.2-7.1 L/100 km)
Competition Mercedes CLA; BMW 2-Series, Ford Fusion, Honda Accord
Pros Cons
Audi badge Less-than Audi feel
Available quattro 1.8L/auto combination lacking
Wi-Fi, other goodies Price can rise quickly