By the time the previous-generation Audi Q3 landed in North America, it had been on sale in Europe for several years already; so while it exhibited all of the style and quality Audi customers expected when it landed, in some ways it felt a little behind the class leaders, which were new to market at the time. Now, though, Audi’s turned the tables with a Q3 that leads its class with its drivetrain, technology, features, and spaciousness. It is, by far, the most-improved small luxury SUV on the market, one so good it has jumped to the head of the class.

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The Q3’s 2.0-litre turbocharged four-cylinder produces 228 hp, and it’s coupled to an eight-speed automatic that allows for a wide range of driving personalities. Leave the Audi drive select in comfort mode, and the Q3 mooches around town silently and with impressive efficiency, the gearshifts barely perceptible and the engine humming away smoothly in the background. Flip drive select into its sportier setting and pop the transmission into “S” (or shift it manually) and the Q3 delivers snappy responses from the throttle and transmission, as well as a nice piped-in exhaust burble.

Thanks to a brand-new platform, the new Q3’s steering, brakes, and suspension are well up to the task of supporting the drivetrain’s eagerness. There are three steering weights to choose from (the lightest is actually the nicest), the brakes have plenty of stopping power, and you can now option wheels and tires up to 20-inches. All in all, as you start to drive more enthusiastically, the Q3 feels more like a jacked-up hot hatchback than a small SUV, which is about the best compliment I can pay it.

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In addition to delivering a far superior driving experience, the Q3’s new platform also liberates significantly more interior space than before. The front seats feel like they’re from the class above, and there’s way more head-, leg-, and elbow-room than before, and dash and centre console have been redesigned with far more storage space, too. Most importantly, the back seat is noticeably more spacious, and is easier to access through a wider-opening door, and the cargo area can hold a lot more, too.

As you’d expect from a brand-new Audi, the new Q3’s tech is bang up to date as well. While a base model at $38,900 will still have conventional instruments, a full-digital Audi virtual cockpit dashboard is standard on higher-end models, and all Q3s get a fast, responsive, ultra-high-res touchscreen infotainment system that gives fingertip control of a superb audio system (a full-on Bang & Olufsen on top trims), navigation, and a broad range of customization features, right down to the colour of the ambient lighting. Apple CarPlay now works wirelessly, and there’s an inductive phone charger in the console. Available driver-assistance systems include blind spot monitoring, automatic pre-collision braking, adaptive cruise control, and even an automatic parking assistant. Like all Audis, these features feel properly integrated into the car rather than add-ons, a sign they’ve been baked into the car’s design and philosophy from the start.

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But by far the best thing about the new Q3 is the value. Even with standard quattro all-wheel drive and all of the luxe features you really need, it starts at under $40,000, with the full-fat Technik trim for less than $46,000. Tick all of the boxes and you’re just over $50,000. On the one hand, that’s a lot for a compact, four-cylinder SUV; but it’s not a lot when you consider how up-to-date it is, and the fact that, in its class, it is easily the roomiest and most versatile choice – as well as being a lot of fun to drive.