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The luxury compact hatchback segment is a tiny niche, with only the very different Lexus CT 200h hybrid hatchback competing directly against the A3.

While it starts at less than $28,000, it's possible to pay more than $40,000 for a high-end all-wheel drive A3 model. At that level, the smallest Audi competes with many larger and newer vehicles--which may be why it's always been one of Audi's lower-volume models. We look forward to next year's model.

Standard features on the entry-level A3, which is fitted with the gasoline engine and six-speed manual, include the leather upholstery, keyless entry, fog lamps, automatic climate control, and a sound system putting out 140 Watts through no fewer than ten speakers. One step up is the $2,000 Premium Plus package, which bundles in LED running lights and xenon headlamps, a power adjustable driver's seat, audio controls on the steering wheel, Bluetooth integration, larger alloy wheels, and ambient LED lighting for the interior.

Then there's the options list, which includes a premium sound system from Bose and an in-dash navigation system (now feeling slightly dated itself). Audi even charges for the cable to connect your iPod into the stereo system--a reminder of the car's age, not to mention a disconnect with what buyers at all levels expect from any 2013 car.

The TDI diesel is the one for fuel efficiency, with a 42-mpg highway rating and a combined 34 mpg EPA rating. Many TDI owners report real-world results that exceed the EPA numbers, so it's possible that the diesel A3 could be half again as fuel-efficient as the gasoline models, which are rated at a combined 24 mpg--a low number these days for compact hatchbacks of any ilk.

Roadholding is good, as you would expect from an Audi, despite light and somewhat numb electric power steering. The optional magnetic ride system boosts ride comfort without compromising handling, and either version feels maneuverable and quick from behind the wheel. Highway cruising is relaxed, too, making the A3 a fun and versatile all-round vehicle for city dwellers who travel.

Inside, front-seat occupants will enjoy the standard leather upholstery, though the seats lack side support and sit quite low in the cabin. But rear-seat riders may find space somewhat cramped. Carrying four adults will require negotiations to keep the front seats far enough forward to accommodate long legs in the rear, and headroom isn't particularly generous either.

While it's not Audi's most recent design, the instruments and control layout remain functional, stylish, and luxuriously trimmed.

The aging A3 shows its years in its lack of noise suppression, and it's now sufficiently dated in that respect that you should test-drive the car at a variety of speeds to see if you're comfortable with the noise level. It's not painful, it's just greater than almost any other compact car at any price point. The standard suspension can be rough over jarring potholes as well.

This is the current A3's eighth year on the market, but its design is all but timeless. Some of the softer curves may appear dated from certain angles, but the upcoming replacement doesn't look much different in proportion--its lines are crisper--so the A3 carries its years well both inside and out. The optional big alloy wheels especially give it a sporty character that suits the Audi brand.