Small, premium-brand hatchbacks have not fared well in the United States, where any vehicle with a giant cargo opening and folding seats but which cannot go off-road is considered to be an economy car that people buy because they have to and not because they want to. Never mind the obvious utility of such a body configuration, the improved fuel economy of a four-cylinder engine, the ease of parking a small car, and the fact that some hatchbacks are equipped with all the luxury accoutrements of other upscale automobiles – Americans are always about appearances.

BMW was first to give the segment a try with the underpowered 318ti and failed. Then Mercedes-Benz attempted success with the C230 Sport Coupe only to find that consumers weren’t fooled by the nomenclature. Now Audi hits the market with a luxury hatchback called the A3. But with fuel prices rising, parking spaces getting tighter, and the resurgence of small-car popularity, Audi might just make a go of its new 2006 A3.

After a week behind the wheel, the 2006 Audi A3 2.0T proved to be a fun drive in a stylish package. But unfortunately, the way our test vehicle was equipped, that was all. Cramped seating, a loud interior, the aggravating Multi Media Interface (MMI) for the stereo and navigation systems, and annoying ergonomic glitches made the A3 a bit of a chore to live with unless we were flinging it down a favorite back road. That’s too bad, because this is the first European hatchback to wear a luxury badge that comes remotely close to getting it right thanks to its two extra doors and entertaining performance.