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Think Audi and you think all-wheel drive. Like Land Rover, the German firm has long been associated with sending power to all four corners. But it’s Audi’s sportier cars like the original Quattro that the company has been famous for, not off-roaders.

Lately, though, Audi has started to have a presence in the riding-on-stilts world with the BMW X5-rivalling Q7. And later this year, it will plug another gap in its lineup with a compact version—the Q5.

With global fuel prices rocketing, you could argue that launching another vehicle like this isn’t particularly well timed. But then if Audi has got it wrong, then so have Saab and Volvo—both the Swedish firms have similarly sized soft-roaders coming soon, in the shape of the 9-4X and XC60 respectively.

Audi certainly doesn’t think its crystal ball is broken, seeing plenty of growth in a sector that’s also occupied by the Land Rover LR2, Mercedes GLK and BMW X3. The latter is starting to feel its age now, though, and with a new version still some eighteen months away, the Q5 looks a dead cert for the class top spot. But is that the case?

Well, judging by the number of heads turned during the launch in Valencia, Spain, it’s certainly got the public vote. At the front there’s a big chrome grille, which is flanked by intricate headlights (S-Line versions get LED running lights like those of the S5 and R8), while at the rear there are neat Q7-style taillights and a meaty lower diffuser. The squat shape itself has shades of the A4 Avant about it, injected with some appropriate off-road chunkiness.

Inside, the cabin will be familiar to anyone who’s ridden in an A4. Audi makes some of the best interiors in the world and the Q5 is a great example. The dashboard is good-looking and solidly made, while all the controls and materials feel classy to touch. The optional MMI set-up is logical and new features include a sat-nav that replicates buildings in three dimensions giving a proper bird’s eye view in cities.

Equipment levels are generous, with climate control, alloys and leather upholstery as standard on the European SE, while the options list includes a lane departure warning system which vibrates the steering wheel should you nod off and drift into another lane without signaling. Other options include a sliding rear bench and a front passenger seat backrest that folds flat to allow long items like surfboards to be stowed. There’s also plenty of space as standard, with a rear cargo area that measures 19.1 cubic feet with the seats up and 55.1 cubic feet with them folded, making the Q5 even roomier than an A4 Avant.

Under the skin lies Audi’s Quattro all-wheel drive system, with a 40/60 bias in favor of the rear wheels. Like other Audis the engine is mounted longitudinally and almost entirely ahead of the front axle. But despite this, it doesn’t feel nose-heavy and turns into corners very eagerly. Body control is excellent—there’s little roll, the vehicle staying flat at high speed—and there’s plenty of grip. Enter a bend too fast and the front will run wide, predictably and safely. It’s not what you’d call exciting—the steering is too numb and artificial for that—but it’s agile and about as good as non-performance vehicles of this type get. The payoff is a firm ride, which transmits too many imperfections to the cabin.

Should you wish to venture into the rough stuff, the Q5 features a new ESP system, Hill Descent Control and even a roof-rack sensor, which tells the ESP if a rack has been mounted and adjusts the car’s attitude to take account of the shift in the centre of gravity.

As far as power is concerned, U.S. customers will have to make do with Audi’s direct-injected 3.2-liter V-6, good for 270 horsepower and 243 pound-feet of torque. Other markets will receive two flavors of diesel power, in 168-horsepower 2.0 TDI and 236-horsepower 3.0 TDI forms, along with the turbocharged 2.0-liter gasoline engine tested here.

Super-smooth and boasting a healthy 258 pound-feet of torque available from just 1500 rpm, our 2.0-liter turbo tester offered quiet yet rapid progress. Despite tipping the scales at just over 3800 pounds, the Q5 races to 60 miles per hour in around seven seconds, and lunges forward with real mid-range thrust even at high speed. Observed fuel economy is a respectable 33 miles per gallon.

We tested the Q5 with Audi’s new seven-speed S-Tronic twin-clutch transmission, which gives the driver the option of full auto mode, Sport mode or full manual mode thanks to steering wheel-mounted paddles. It’s a great system, changing almost imperceptibly and quickly in all modes.

So is the Q5 the new class leader? Certainly. It’s more fun to drive than the GLK and a better all-rounder than the X3. And, unless you really need a full-on mud plugger, it’s got the measure of Land Rover’s LR2, too. It’s not revolutionary like the original Quattro, but it’s a step above the competition in the growing softroader segment.

Click here to read this article within the magazine.

Magazine Issue: Winding Road Issue 37