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Audi A8 in a Smaller Platform  For a car that is slightly smaller than the Honda Civic sedan and the Ford Focus sedan, the designed-for-America (and China) 2015 Audi A3 sedan comes across as a premium piece.  The A3 previously was a slow selling hatchback.  Now adding the three-box notchback with a trunk bodystyle Audi can substantially broaden its appeal in the USA.  For decades, American buyers have perceived hatchbacks to have less safety (less rear crash protection – a perception) and less security (from bad guys seeing into the cargo area and stealing what is there).  The sedan clears those negative perceptions and gives Audi a strong platform to build the bottom end of its brand.

Competes With New Premium Small Cars  Designed to compete head-to-head with the newly introduced 2014 Mercedes-Benz CLA and the BMW 1-Series, the Audi A3 does not scrimp on technology.  Audi’s features list is on bold display in this car.  The Audi A3 is standard with a panorama sunroof, retractable MMI (multi-media interface) display, leather seats, Xenon headlights with Audi’s signature LED daylight running lights.  It also has LED taillamps.

You won’t have a problem syncing your iPhone to the A3 and, if you want, the car can become a 4G LTE internet hotspot.

A4 Cues Prominently Evident  Think of the Audi A3 as the last generation A4.  It’s about 7/8th the size of the present A4.  In fact, at a glance, you could mistake the A3 for the present A4.  Too small?  Not at all in the front seat.  While it might be a bit narrow for some, it has enough headroom for moderately tall drivers.  The rear seating is low (to give some headroom with the fast sloping rear roofline) and there is little foot room or knee room.  Clearly, the A3 is for the driver and front seat passenger.

Pricing Sweet-Spot – $30 – $35k  At $29,900 base, the A3 is priced on top of the new Mercedes CLA but comes with standard equipment that is optional on the Mercedes.  The base engine for the front wheel drive version is a 1.8L 4-cylinder with 170HP.  When you opt for the Quattro all-wheel-drive system the engine bumps up to a 2.0L 4-cylinder turbo ($32,900).  These are Audi’s EA888 series of engines.  Later, a turbo diesel will be added to the lineup as will a higher horsepower S3 version.

Proliferating Bodystyles  The A3 sedan is assembled in Gyor, Hungary just inside the Hungarian/Austrian border.  Out of seven variants of the A3, the Gyor plant will assemble two – the sedan and the cabriolet.  This is a new $1 billion investment in Audi’s presence in Hungary (where they also build the TT sports car and have an engine plant).  The others will include 3-door hatchback, 5-door hatchback, e-Tron EV, Q3 XSUV and a sportback.  The key models in the USA are the sedan, of course, and the Q3 crossover SUV.

Sales Prospects  Audi estimates this segment – lets call it the Premium B-Segment – will sell about 75,000 units per year.  For reference, the Mercedes CLA has sold a bit over 6,000 cars for the first three months of 2014 putting it on a sales rate of 20,000 to 25,000 units per year.  Given that the first quarter of 2014 had dismal weather for much of the country depressing sales, AutoPacific’s forecast for the CLA for the 2014 calendar year is about 3o,000 units.  The A3 is forecast to have 22,000 sales in 2014 after its on-sale date of April 3.  Steady state, A3 sales are expected to be in the 25,000 unit range per year with the CLA being in the 28,000 unit range.  The CLA, however, achieves its sales with one bodystyle and two levels of engine tune.  The Audi arguably has to work much harder leveraging its variant proliferation to achieve its sales.

In any event, the Audi A3 is an entry that will improve Audi’s overall sales in the USA and provide an entry level product for buyers wanting fully-featured, premium brand transportation in an efficient package.