At first glance, it might appear as though Audi is taking a step backward with its less-powerful, less-expensive 2010 S4, but, really, the "third" German brand is finally living up to the tagline it recently dropped: Never follow.

Until the 2010 S4's arrival, Audi's compact sports sedan range essentially mirrored competitive offerings from Stuttgart and Munich: A base model, a plusher and faster mid-range model, a faster and plusher mid-range variant and, at the top of the range, a high-performance model massaged by the company's in-house masseuses.

Today, however, visit an Audi store and you'll find just two small four-door offerings: The cheapie (by compact sports sedan standards) A4 2.0T, equipped with a less-than-refined but still pleasing turbo four-banger and, for 2010, a very modestly-priced S4 that offers considerably more power, not to mention more all-around sport, than its rivals from Mercedes-Benz and BMW.

The latest S4 eschews its predecessor's V8 for a torquier, far more efficient supercharged V6 - not to mention more space inside and a $3,000 less price tag.

Gone and forgotten - except by the handful of people who bought them - is the A4 3.2-liter V6.

Marketing to win
Audi hopes that its strong and sporty offering, which undercuts less-powerful rivals by thousands, will lure higher-end buyers into the brand. Unlike previous S4s, which have been pitted against M3s and AMG variants of the C-Class, the new, mid-$40,000-range S4 has set the rather more pedestrian 335i and C350 in its sight.

After a couple of days of swinging the S4 around Infineon (think Sears Point) Raceway and the surrounding beauty of Napa Valley, California, we think Audi might just be on to something. It's sort of a lesson the German automaker has taken from the Koreans: Offer more for less. But rather than offering up more standard features and interior room, Audi is offering performance.

The recipe
Audi chose to forgo the rorty, snorty V8 it used in the last S4 for the 3.0-liter, supercharged V6 it shoehorned under the hood of the larger A6 3.0T earlier this year. Like the A6, which we drove in March, the S4 is badged "3.0T" despite the lack of a turbocharger. Color us confused.

A six-speed manual transmission returns, but a seven-speed S Tronic dual-clutch automatic transmssion with paddle shifters is new, as is a newly optional adjustable rear differential. These are very good things - especially in a midsize sports sedan.

By comparison, Mercedes' decidedly un-sporty C350 Sport offers 65 fewer ponies and only a conventional automatic and BMW's 335i, which impressed us earlier this year, comes up 33 horsepower short.

Then there's the fuel economy: A class-leading 28 mpg on the highway for the S4 with the S Tronic or 27 mpg for a six-speed stick. The value quotient adds up quickly.

On the go
Despite the impressive on-paper specifications, we weren't fully sold on the S4 until we drove it. Our day started off ominously enough - thick traffic through San Francisco isn't a way to genuinely enjoy a car built for more than just commuting. Still, it gave us an opportunity to explore the virtues that have previously impressed us on the S4's base platform.

The S4 adds very supportive sports seats with built-in headrests and can be equipped with luxurious full leather. Though hardly confining for daily driving, the seats still offered enough grip in the curves that awaited us. Other than a choice of four interior trims - ranging from piano-style wood to an interesting stainless steel - the rest of the interior is essentially standard fare. A roomy front compartment, relatively logical controls - Audi's MMI interface is considerably more user-friendly than even the latest variant of BMW's iDrive - and a decently spacious rear seat combine with Audi's typical world-leading design and attention to detail.

In around-town use, the six-speed manual suffered from relatively long throws and a slightly rubbery feel, but the S Tronic was quite different. Unlike in less-powerful Volkswagens we've driven with this transmission, the S4's hefty torque overcame the snappy shift action. A nice pop during up and downshifts has been engineered in to provide a more sporting feel. For better or worse, we find ourselves recommending automatic transmissions over their row-it-yourself counterparts more and more often; thus is the case with the S4, which offers a decent stick but a sensational slushbox.

It wasn't until we were out of San Francisco that the S4's credentials really began to sparkle. Take the ride, which was soft and composed over urban bumps but firmed up nicely for sweeping on-ramps and hilly curves. Much of this was due to the optional Audi Drive Select system, which offers easy-to-tailor adjustments for the engine and throttle mapping, suspension damping, steering and rear differential. The most obvious change comes from the steering, which is BMW-like in its firmness at its top "Dynamic" setting and Mercedes-like in the "Comfort" mode.

Once we were hustling through those perfect two-lane roads that span most of rural Northern California, we started to play more and more with the adjustable rear differential. It's an option worth checking since, in comfort mode, it acts like a standard open rear differential that, in conjunction with the stability control, will keep you out of trouble. Select "Dynamic" mode and, suddenly, it allows for the kind of tail-out drifting in hard corners that will have you questioning the drive wheels. Nope: Audi's quattro all-wheel-drive system is, of course, standard here.

There wouldn't be much of a hustle without some decent underhood motivation - and here the S4 delivers, as well. Its 333 horsepower, supercharged V6 is quiet and refined, delivering strong power at pretty much anything above 2,000 rpm. There's a bit of what feels like turbo lag at lower rpms, but working the paddle shifters or staying in the right gear will helped make the best of the powertrain. The S Tronic is quick to downshift to take advantage of the 325 lb-ft. of torque, which is aided by direct injection.

Audi quotes 4.9 seconds for the 0-60 mph sprint before topping out at an electronically-limited 155 mph.

A few hot laps around the technically challenging Infineon Raceway revealed a stiff and predictable chassis. Under normal conditions, power is split 40 percent to the front and 60 percent to the rear, but with the adjustable rear differential - which is similar to Acura's SuperHandling system - set to "Dynamic," it's possible to transmit the bulk of power to just one wheel. Tight, corkscrew-like corners are simply no challenge for the S4 on road.

Our only real complaint is the relative lack of feel through the S4's steering wheel. While the commendably high effort level finally matches that of Audi's Bavarian rival, the S4 suffers from an ever-so-slightly vague feel through the tiller.

Leftlane's bottom line
The S4's appeal lies far beyond simply its value, although it's worth mentioning that, the Audi costs about 10 percent less than an equivalent 335i xDrive but offers a more overtly sporting flair. Don't compare the S4 to the M3 or C63 AMG - they'll outrun it, but they'll also cost you a Yaris or so more.

Audi's S4 might be just what this economic climate needs: A reasonably-priced, high-performance German sports sedan (no wagon will be offered in North America) that offers that impossible-to-describe "something special" feel of a limited-run model. Only time will tell, but odds are that Mercedes and BMW will follow Audi on this one.

2010 Audi S4 base price, $45,900.

Words and photos by Andrew Ganz.