First drive in the 2017 Audi S3

[Audi S3 News]

DURHAM, NC-On a crisp morning in October, Audi hosted a coterie of journalists at an unassuming brick building near Durham's downtown. The building was a "culinary incubator"-essentially a temporary restaurant space for concept dining startups and events. Speaking over coffee and various breakfast foods, Audi executives tried to tie the building's startup ethos into an overview of Audi's own strategy for the coming year. Part of that strategy involves the new Audi S3, a premium sedan in the A3 family that we journalists were about to drive for the first time.

The 2017 S3 is little changed from its earlier version, but it's still an important car for Audi. Audi is VW Group's most profitable brand, and it's a critical part of the German automaker's strategy to retain VW owners who are ready to "graduate" to a luxury brand. And, after a bruising year of dealing with the legal fallout from VW Group's "dieselgate" scandal, Audi is no doubt hoping to capture even more of those former VW owners. Audi hopes this despite its involvement in the scandal, on the assumption that the Audi brand is not associated with the scandal as strongly (although Audi allegedly played a key part in VW's diesel scandal and the brand may be facing its own legal issues with recent revelations of falsified CO2 numbers).

But the S3 is a 2017 car with 2017's hindsight. The S3 lived up to its premium efforts right from the start. The seats weren't too soft or too hard, and I felt the right balance of sportiness and comfort. From the driver's seat, I found the car to be responsive; there was hardly any delay between gas pedal to acceleration, and the steering felt tight as we curved along rural roads.

The S3's engine is largely unchanged from the 2016 S3-a 2.0 TFSI engine with Audi's patented quattro all-wheel drive gives the car some oomph at 292 hp (218kW) and 280 lb-ft (380Nm) of torque, and it clocks in 0 to 60 in 4.7 seconds, according to the automaker. What has changed is that the powertrain has been altered to allow for more rearward torque-so the car won't reduce rearward power in an oversteer situation. While we didn't have a ton of time to test this out on North Carolina's public roads, the S3 was more than capable of executing gentle and not-so-gentle curves at robust speeds.

The Audi S3 has a magnetic ride suspension option. Software-defined presets are a menu away, and you can create an "individual" ride if one of the Dynamic, Comfort, or Auto modes doesn't do it for you. You can also adjust the engine and exhaust sounds from the cockpit, if you're ready to cut the conversation and lose yourself in driving for a bit. The sound isn't synthetic-the car apparently has an actuator that imposes an oscillation on the exhaust flow to give it a sportier growl.

Speaking of sound, the car does a great job of insulating you from the road in general-several times I found myself over the speed limit, although it would have been hard to tell from inside the car. The interior was as serene as ever. We never got close to it, but the car will hit 155 mph if you have a long-enough stretch of autobahn (only 130 mph with all season tires).

Using the S3's paddle shifters to manually work your way through the six-speed S-tronic transmission is fun for people who like the feeling of actually driving a car. However, so as not to hurt the engine, the car will take over automatically and put you back in regular Drive mode if it senses you're in the wrong gear and haven't shifted in a few seconds. But downshifting to slow down off a highway was as satisfying as doing it in an honest-to-goodness manual vehicle.

My only disappointment was the S3's gas mileage. At 24 miles per gallon on average (21 mpg in the city and 28 mpg on the highway), the Audi S3 actually has worse gas mileage than the 200-lb heavier Volvo S60 I drove the month before. That car got 25 mpg on average, 22 mph in the city, and 31 mpg on the highway, though it is $15,000 more expensive than the tricked-out S3 I drove.

One of the ways car companies boost their mileage is by including start/stop engine technology to improve gas use during city driving. Start/stop was a noticeable jolt in the 2017 Chevy Cruze, hardly noticeable in the Volvo S60, and I didn't notice it once on the Audi. Many Americans seem averse to the feeling of a start/stop engine, so concealing it is a good idea.

The S3 comes at a base price of $42,900, but for an extra $3,000 you can purchase the technology package with Audi MMI navigation, side assist with rear cross-traffic assist, and the virtual cockpit. I'm a fan of Audi's MMI knobs-once you get the hang of them they're dead simple to use and help you avoid touchscreens as much as possible. The S3's MMI knob also integrates with Apple CarPlay and Android Auto interfaces so you can navigate through your contact list, music, and other select third-party apps.

I like how the MMI knob, along with a center console that's visually dominated by two giant circular air vents, makes the interior of the S3 distinctive from other cars in its class. Those air vents live where most cars put their infotainment screen, but instead Audi has a small retractable screen that can be raised or lowered into the dashboard. This retractable screen isn't new, but it's a design choice that makes the car feel sportier, particularly compared to other OEM interiors which look like a screen was glued to the center console as an afterthought.

This is the fourth new Audi we've encountered with Virtual Cockpit (after the TT, A4, and Q7), and we remain fans. Virtual Cockpit is powered by a dedicated Nvidia Tegra 30 processor; a second Tegra 30 is onboard to run the MMI infotainment system.

If you're looking for new things on the 2017 S3, you may be more inclined to look to the exterior of the car. The S3 has a new front fascia and rear blinker lights that show movement in the direction the car wants to turn. ("When you see something that swipes in the direction you're turning, your brain registers it a little bit quicker," one Audi executive put it.)
Courting that startup magic

The sideshows during Audi's 2017 S3 first drive all involved stops at local startup businesses. That same week, the company announced that it's placing a "shared fleet" of Audi A4s at American Underground, a massive startup incubator at Durham's former American Tobacco Company Complex.

"Three fully accessorized, 2017 Audi A4 sedans will be available on demand and ready for us," Audi said in a statement. "Users will be backed by a 24/7 customer service call center." Employees of American Underground startups will be able to give Audi feedback to help it refine the shared fleet experience, which relies on an app to unlock the cars.

Although us journalists weren't taken to American Underground to see these A4s, the announcement reflects an interesting component of car companies' strategies for the long-term future. Every major automotive company seems to be working on some sort of "shared fleet" experience to cater to urban people who have less and less of a desire to own their own vehicle, especially as Uber and Lyft expand their reach. Shared fleet experiments give auto companies a way to retain younger customers in the hopes that, when they get older, they'll stay loyal.

Which brings us back to the 2017 S3. Like cars from Audi's eventual "shared fleets," the S3 is built to house car class graduates, in this case from a cheaper car to an entry-level luxury vehicle. So Audi doesn't skimp on handling or power for a $43,000 car, even if it trades off on mileage. The idea is to keep you coming back. After a first drive with the S3, Audi seems to have achieved that goal.

Read more on Ars Technica Addendum.