The next S3 will have 296bhp but be 60kg lighter and capable of over 40mpg, according to claims made by Audi.

Using a 2.0-litre turbocharged engine with direct fuel injection, the long-stroke unit shares only its 1984cc capacity with its predecessor. Producing a monumental spread of torque, totalling 280lb.ft between 1,800 and 5,500rpm, it also produces its peak power at 5,500rpm. The redline is set to be 6,800rpm.

A six-speed manual gearbox and quattro four-wheel-drive will be standard, but the optional S tronic twin-clutch automatic shaves 0.3 seconds off the 0-62mph time, dropping it from 5.4 seconds to just 5.1. A new, larger turbocharger runs at a higher pressure than before; up to 1.2 bar for faster response.

According to Audi, the car has achieved 40.9mpg on the combined cycle thanks in part to the use of `indirect injection' alongside the FSI direct injection. While the FSI system is used at start-up and high engine loads, the indirect fuel injection system comes in at lower demands and results in lower CO2 and particulate emissions.

Further efficiency gains have been made though the S tronic gearbox by employing `coasting', where when the driver lifts off the throttle the gearbox effectively shifts into neutral until the throttle pedal is pushed again.

Weight savings have been made in the engine, various body panels and thanks to the new modular MQB chassis. The body alone is 28kg lighter than before and helps to lower the centre of gravity. Maximum kerb weight for the 2013 S3 will be 1,395kg.

This engine has been designed exclusively for use in the S3, although elements of its design are almost certain to filter through to other Volkswagen Group engines in due course.

Pricing in Germany will start from 38,900 euros, with UK-specific figures to be confirmed later this year.