When my 11-year-old twin boys first sat in the A3, they were unimpressed. Besides the (slightly) race car-like “TDI” and “Clean Diesel” decals the Audi PR folks slapped on the car, there wasn’t anything overly sexy or exciting in the eye of an 11-year old boy.

Then I started telling them about the turbocharged 2.0-liter diesel engine, the quick-shifting S tronic transmission, and the no speed limit autobahn-inspired German-engineered suspension. I heard myself say to them, “This car is all about the driving, kids. Very solid. German goodness. This is a cool car, guys.”

The focus of the A3 TDI is the new for 2010 engine, a turbocharged 2.0-liter four-cylinder TDI clean diesel that generates 140 horsepower and 235 lb.-ft. of torque. The diesel nature of this engine is not invisible. You know this is a diesel when you start the engine by a hint of clatter coming from the engine bay. But the sound is not at all intrusive, and when you drive around town with the radio on you can not hear it and you quickly lose all memory of the noisy, smelly, dirty diesel engines of yesterday.

Even with a modest 0-60 mph time of 9.1 seconds, 235 lb.-ft. of torque give the A3 TDI a personality more like a small sports car than the mini station wagon it is.

After a week of mostly around town driving, we got average mileage rating of 35 mpg, and that was with a lead foot. The EPA numbers are 30/42 city/highway. These are solid numbers, especially considering that the A3 TDI feels sporty when darting in and out of traffic, much more so than the green cars Audi considers the competition: Lexus HS 250h, Toyota Prius and Honda Insight.

The Lexus gets EPA numbers of 35/34 city highway, the Insight gets 40/43, and the Prius gets a commendable 51/48.

Even while providing a fun driving experience, the 2.0-liter diesel engine has a ULEV-II emissions rating, which means that the levels of hydrocarbon and carbon monoxide emissions are half as much as those of a low-emission vehicle II-certified vehicle.

Mated to the 2.0-liter four is Audi’s fantastic S tronic transmission, as much the heart of the A3 TDI as the engine. S tronic is not new for this year, but it is great. A friend of mine who races said it best when he told me, “It shifts better than you, or I, can do it.” He was right.

Shifts with the S tronic direct shift gearbox make an extremely quick “pop” – no, make it a “pip” – sound during up- and downshifts. The transmission uses two wet plate-type clutches with hydraulically regulated contact pressure. One of the clutches engages the odd numbered gears; the other engages the even numbered gears. Before a shift, one clutch engages the next gear, making the transition from gear to gear virtually instantaneous. A traditional automatic transmission uses a torque converter, which saps power during shifts. S tronic shifts with no loss of power, and downshifts are equally impressive with revs rising instantly and smoothly – arguably better than any skilled heal-and-toe driver could do it.

The suspension is also a winner. The front has McPherson struts with lower wishbones, tubular anti-roll bars, track-stabilizing steering roll radius and an aluminum subframe. The fear is a four-link with separate springs/shocks, tubular anti-roll bar and subframe. In typical German car fashion, the entire system provides a terrific balance between sport and luxury.

Aside from driving dynamics, we find little to complain about. Space in the back seat is tight. Then again, the A3’s small size is a why the A3 is fun to drive. Low mass and body weight are essential ingredients in the fun-to-drive formula.

Styling is understated, subtle, and getting a bit tired almost seven years into its lifecycle. At the same time, the A3’s subdued persona is enduring. With its TDI engine and S tronic transmission, this A3 is all about engineering. This is a driver’s car, and it will be purchased and loved by connoisseurs who understand and appreciate the cutting edge diesel engine, transmission and suspension.