In just three weeks I’ll be giving you the lowdown on the new BMW 3-series and, good or bad, it is unlikely that we’ll see a more significant car launched during 2005.

The 3-series is the car that has done the impossible and smashed the sales hierarchy. No longer must a car be cheap and carry a downmarket badge on its nose in order to sell in huge quantities: for years the 3-series has sat among Vauxhalls, Fords and Peugeots in Britain’s top 10 bestselling cars.

And there is nothing Audi would like more than for its A4 to join it on these sunlit uplands. Like so many Audis, the A4 is a nearly man. In common with almost all its stablemates, it offers good looks, great quality and a range of dynamic talents that only draw complaint from tediously picky people like me. If you don’t want a 3-series, it’s absolutely the next best thing.

Which, of course, is precisely the problem. Audi’s latest attempt to rectify this is not, like next month’s 3-series, an all-new car, but given the level of change it might as well be. There are new engines, new gearboxes and dramatic changes to the chassis: steering, suspension, brakes — you name it, they’ve changed it. Visually, the only external body panel that has survived is the roof.

I quite like the look of the new car. It’s a sharper design that trades a little cleanness for a lot more meanness, and for a manufacturer after a much needed shot of sportiness for its smallest saloon, it works quite well.

The new engines include two big petrol motors (a 252bhp 3.2 litre V6 and a 197bhp 2 litre turbo) and one big diesel (a 3 litre V6 with 201bhp), but the most important addition to the range by far is the 138bhp 2 litre diesel. This is the engine that Audi hopes will help close the sales gap between the A4 and the 3-series and the one it delivered to me to test.

It may not seem that powerful on paper, nor do its official figures suggest anything more than passable performance, but for some reason the car I was given felt almost absurdly fast. Forget outright power; this car has so much mid-range punch that a previous-generation Subaru Impreza Turbo proved unable to shake it in a straight line.

Driven hard on cold damp roads, the electronic stability and traction control systems were forced into overtime trying to put its torque on the tarmac. Yet there is next to no lag and, if you ease off, next to no fuel consumption either. On a quiet 130-mile trip down the M4 it did 50mpg which, to put it another way, is Wales to London for a tenner.

This did not surprise me too much. The engine is already under the bonnet of the VW Golf and Skoda Octavia, not to mention the A4’s little sister the A3. What impressed me rather more was the way Audi has sharpened up the A4’s handling and significantly improved its ride quality.

It should be said that the start point here was hardly class-leading and I’m not sure the end point is even as good as the current 3-series, let alone the one we’ll see in the new year. But a clear improvement has been made: whereas once the ride was a substantial annoyance it’s now comfortable and capable.

And when you start throwing it around, instead of grudgingly tolerating your childish excesses it actually indulges its driver to a small extent. There’s poise too; and combined they offer one more reason not to buy that 3-series.

Inside, little has changed except the steering wheel and various upholstery options, and that’s how it should be: the A4 always did have the best cabin in the class, and so it remains.

In fact there is only one issue that clouds this otherwise uniformly sunny picture. For a saloon sold by a luxury manufacturer, its lack of mechanical refinement is a serious flaw. For all the engine’s many strengths, it is too noisy by far and has little trouble shattering the thick veneer of sophistication created by the rest of the car.

All four-cylinder diesels rattle a bit, particularly when cold, but this one sounds more Massey Ferguson than upmarket Audi. Even when thoroughly warm and running at a typical motorway cruise, you can only escape its coarse nature by turning up the stereo. I’ve not driven them back to back, but I have no memory of such uncouthness from either the BMW 320d or Jaguar’s X-type 2.0d.

As a driver who appreciates the quiet life, it would make me question the wisdom of buying the car, a particular shame as not only was I otherwise thoroughly impressed but, of the range, it seems to be the one with the best blend of performance, economy and emissions.

It will be interesting to see how it stacks up against the new 3-series. It’s tricky to predict BMWs these days but it seems unlikely that even this maverick manufacturer is going to play fast and loose with its most precious product. Expect a solid improvement in all areas over the hardly shabby standards of the current car.

If that’s the case, I fear the A4 is going to find chipping away at its sales lead as hard as ever. But if BMW drops the ball, the A4 is better positioned than ever to pick it up and run.

Vital statistics

Model Audi A4 2.0TDI
Price £21,340
Engine type Four-cylinder, 1986cc
Power/torque 138bhp @ 4000rpm / 236 lb ft @ 1750rpm
Transmission Six-speed manual
Fuel/CO2 47.9mpg (combined) / 158g/km
Performance 0-62mph: 9.7sec / Top speed: 131mph
Verdict An effective, comprehensive update
Rating 4/5

The opposition

Model BMW 320d ES, £20,995
For Great blend of power, economy and handling
Against Ubiquitous, about to be replaced, wide-boy image

Model Jaguar X-type 2.0d Classic, £20,495
For Exceptional engine refinement, ride quality, handling
Against Strange looks, limited performance, cramped rear