Audi’s A1 has been operating in a bit of a vacuum since its launch in 2010. It’s the only member of the big three – Mercedes and BMW are the other two members of the club – to offer a compact hatchback.

When the first generation model it proved to be a bit of a revelation, offering access to premium motoring all wrapped up in an appealing cute package.

Fast forward eight years and the second-generation model faces a much tougher job than its predecessor. It faces much stiffer competition this time around, and not just from the premium sector in which it resides because there are cheaper but compelling offerings on the market from marques like Ford and Seat. The question is, then, whether Audi have moved the game on enough in the compact class to see off its rivals.

The new model is significantly longer – 56mm – and now measures a few millimetres over four metres. Its width remains the same (1.74m) whiles its low roofline – the A1 is just 1.41m tall – wide track and short overhangs help emphasise its squat stance.

I thought the first generation A1 had aged quite well but, compared to the new model, it does look very dated indeed.

The front of the mkII is dominated by the Singleframe grille and, as Audi like to describe them, ‘implied’ side air inlets. Towards the front edge of the bonnet are three narrow slits that pay homage to 1984’s Sport Quattro.

There are references to other historic models, such as the lines pressed into the shoulders above the wheel arches, but you’d have to be a bit of an Audi aficionado to pick up on them.

The new model’s lines are much more clearly defined than the outgoing car. There are straighter lines, sharper creases and bolder details giving the mkII more presence and a much greater degree of sporting intent.

There’s a choice of 10 colours which, in the pursuit of personalisation, can be combined with a contrasting roof extending from the A-pillar to the boot-mounted spoiler. The mirror housings, side front spoiler lips and side sills are all also available in a contrasting colour.

My review car arrived in S line Contrast Edition trim which adds 18in wheels, rear lights with darkened lenses, black Audi rings in the grille and the model identifiers on the tailgate as well as exterior and interior styling packages with exclusive accents.

Put simply, the new A1 is a great-looking car.

Climb inside and, from the driver’s seat, things look equally as good.

The digital dashboard is, for the sake of good alliteration, delicious and, with the option of adding Audi’s delightful Virtual Cockpit right across the range, there’s plenty of tech available to satisfy the geekiest among us. And yes, I really was looking at me when I said that.

All models are equipped with an 8.8in touchscreen but, as my review car was fitted with the Technology Pack, the screen is upgraded to a 10.1in. The pack also adds built-in sat-nav, a handwriting pad, a 36-month subscription to Audi Connect which gives access to online features, and a wireless phone charger.

The display, along with the very welcome physical controls for the air con and other auxiliary functions, is angled sharply towards the driver.

Sounds are supplied via a six-speaker stereo unless you plump for the B&O system that pumps out 550W through 11 speakers and, yes, it was fitted to my review car and yes, it does the business.

Interior quality is, by and large, excellent. There’s certainly no question that it is beautifully put together. However, delve a little deeper and there are some plastics – on the doors and the centre console – that feel a little out of place in car that resides in the premium sector of the motoring world.

My review car was equipped with the LED Ambient Lighting Pack. For £150 you can choose from a palette of more than 25 colours. Is there such a thing as too much choice?

There’s a decent amount of head and legroom for front seat passengers while those is the back don’t fare too badly either. Bear in mind that the A1 is a small car and I think you’ll be pleasantly surprised at the amount of room people in the back are afforded. It’s possible to, just, sit a pair of six-footers in tandem, while the rear bench will accommodate three abreast, as long as you’re not adverse to a substantial degree of shoulder rubbing.

Finding the ideal driving position is compromised a little by a driver’s seat that’s just lacking that last centimetre of vertical adjustment. The seats in S Line trim cars include additional bolstering but don’t get too carried away, they won’t do much to keep you in your seat if you’re a little too enthusiastic through the corners.

Visibility is good out the front and sides, but the thick rear pillars and narrow rear screen make it considerably more difficult to see out the back. Rear parking sensors are standard on Sport trim and above, while front sensors and a rear camera are available across the range. LED Headlights are fitted to every A1.

The 1.5-litre beneath the Python Yellow bonnet of my test car produces 148bhp. Peak torque arrives at just 1,500rpm which means that the four-cylinder turbo is not only sprightly, but it’s flexible too, and that sits well with the nature of the A1 which, without wishing to sound as if I’m damning with faint praise, possesses a spirited turn of pace if you want to hustle it along through the countryside.

The steering is nicely weighted: light around town but with a welcome amount of resistance as the pace increases. It’s accurate too, so you can point the nose at the apex of a corner with confidence. The S tronic gearbox can largely be left to its own devices, although you can manually swap ratios if you want the full experience. It’s intuitive, smooth and unobtrusive.

With the Sport suspension fitted to my review car, there’s very little noticeable lean when you tackle corners at pace and there is plenty of grip available. Push beyond the limits of adhesion and the nose will start to gently understeer wide. Lifting off the accelerator will quickly rein the front end in.

The ride is clearly compromised by adding the 17in wheels and Sport suspension to S Line cars. At lower speeds across sharper-edged potholes and broken surfaces it can feel a little brittle but once you head out onto the highways and byways and pick up the pace everything settles down significantly and the A1 displays notable abilities as a long-range cruiser.

That’s backed up by a cabin that cossets its occupants in an oasis of relative peace and calm. The four-cylinder engine is quiet right across the rev range and, even when pushed hard, remains muted and distant from inside the passenger space. Wind and road noise is very well suppressed too.

The A1 is a fine car. Its position isn’t quite as secure as it once was, but that isn’t because the little Audi has lost its mojo, just that it’s facing increasingly tough competition. The new model certainly raises the bar and it is, without doubt, one of the best-looking small cars on the market, looking every inch the premium hatchback that it aspires to be.

Audi A1 Sportback 35 TFSI 150PS S line Contrast Edition S tronic

Price: £26,345

As tested: £29,750

Engine: 1.5-litre 4-cylinder turbocharged

Transmission: 7-speed S tronic

Max power: 150PS

Max torque: 250Nm @ 1,500 – 3,500rpm

Max speed: 137mph

0-62mph: 7.7sec

Combined: 43.5 – 44.1mpg

Emissions: 116g/km

For more information visit www.audi.co.uk