2012 Audi A3

The idea of a premium entry in the small-wagon category seemed strange back in 2006, but the A3 makes sense to enough buyers to have stuck around all these years. The A3's continued existence is certain proof that there are enough places in the United States -- in large cities, for instance -- where space is at a premium and small but versatile cars make sense. Often, those urban buyers are wealthy enough to afford a vehicle like an Audi A3. Even now, when carmakers are adding more and more luxury features to their small cars, this upscale compact hatchback remains the only vehicle of its type. The A3 is based on the last-generation Volkswagen Golf, which used to be its only competitor. Now, however, the Lexus CT200h has entered the ring, and its hybrid powertrain produces huge fuel economy numbers. The A3 is far quicker than the CT200h, though, whether equipped with the turbocharged gasoline engine or the turbo-diesel. Both engines are available with the VW Group's benchmark dual-clutch automatic transmission, and the turbo is also available with a six-speed manual. The ace in the A3's pocket is its available all-wheel-drive system, a feature no other car in this segment offers. And as nice as the Lexus is, we think the diesel-powered A3 is a more engaging, more luxurious way to break into the 40-mpg club.