The new Audi S4 arrives in the midst of a global economic slump. It was unveiled at the Paris show, where hybrids and electric vehicles stole the limelight, and it unashamedly advertises the brand motto Vorsprung durch Technik when everybody is talking CO2 and mpg and $$.

Look closer, though, and the new S4 emerges as a surprisingly sensible proposition. It costs less than the car it replaces, it’s 27 percent more frugal in the combined European Union cycle, and in format and appearance it is still perfectly socially acceptable both in sedan and wagon form. The truth is, the fastest version of the new A4 offers the best of two worlds. It’s an instant-torque fuel-miser that will return 39 mpg in extra-urban mode (on the European test cycle) to reward pussy-footed drivers. At the same time, it doubles up as high-tech tearaway that employs trick steering, chassis, and differential to beam you quicker from point A to point B than most of its rivals.

But who exactly are these rivals? At BMW, the 333-hp S4 splits the 306-hp 335i and the 420-hp M3. At Mercedes, it aims at the gap between the 272-hp C350 and the 457-hp C63AMG. The car has not yet been priced for the United States, but in Germany the S4 is about ten percent more expensive than the 335ix and about five percent dearer than the C350 4Matic. But in both cases, the Audi has a power, torque, and performance advantage over the competition. Late next year, we expect to see the new RS4/RS5, which is rated at 450 hp and 331 lb-ft of torque, sources claim. For the top-of-the-line version, the Quattro division will stick to the high-revving, direct-injection 4.2-liter V-8. It is in this context worth noting that BMW and Mercedes plan to embark on a different strategy. While the next M3 will switch from a normally aspirated V-8 to a twin-turbo in-line six, the C63 replacement is expected to shed its normally aspirated V-8 for a twin-turbo eight-ender with a displacement of only 4.6 liters.