As premium brands and crossovers demonstrate strong growth in Europe, the Q3 must be one of Audi's most important models.

Three years on from its debut, it has been given a refresh with an updated look, new and revamped engines as well as more equipment.

This has seen key fleet engines (such as the front-wheel drive entry-level diesel tested here) offer significant cuts in CO2 emissions and fuel consumption, bringing with it reduced running costs and lower benefit-in-kind tax.

All models now have the full body-colour paint finish (previously SE versions had dark plastic lower trim on the front and rear bumpers) and a new metallic effect grille surround.

Headlamps are now xenon with LED daytime running lights (although upgrading to S Line brings full LED headlamps), and Audi’s ‘drive select’ system, which allows the driver to adjust the steering assistance and throttle response. Electric lumbar support for the front seats is also standard.

S Line models have LED headlamps as standard, and ‘scrolling’ LED rear indicators that illuminate sequentially in the direction selected, part-leather seats, S Line suspension as a no-cost option and a power tailgate.

The entry-level diesel engine is the 2.0 TDI 150, offering 10hp more than the outgoing unit, but in front-wheel drive form has CO2 emissions from 119g/km – a reduction of  18g/km or four BIK tax bands. For Quattro four-wheel drive versions, emissions fall from 149g/km to 131g/km, just missing out on the 130g/km write-down allowance threshold.

However, there is now a petrol version that beats the  130g/km benchmark for the first time. The 1.4 TFSI 150 uses Audi’s cylinder-on-demand technology and runs on just two cylinders under light throttle loads or when coasting. CO2 emissions for this model start at 128g/km.

The bulk of corporate sales will be diesel versions, and the new 150hp 2.0 TDI offers a 7mpg improvement on the combined cycle over the 140hp engine it replaces.

In SE guise with 17-inch alloy wheels, the Q3 squares up against the EfficientDynamics version of the BMW X1 (which also achieves CO2 of 119g/km), although the S Line on 18-inch wheels achieves 122g/km. New for the revised model is a higher specification S Line Plus, which has 19-inch alloys and extra equipment.

On the test route, the SE felt more comfortable than the S Line and more forgiving of road surface imperfections.

The Q3 is compact and nimble enough to feel at home in all traffic environments, while the front-wheel drive diesel isn’t short of performance. The power upgrade means the 0-62mph sprint is achieved in 9.6 seconds instead of its predecessor’s 9.9, and the engine is both smooth and refined.

The Q3 also has more of a conventional SUV look than its X1 and Mercedes-Benz GLA rivals, which will boost its appeal.