VALENCIA, Spain — Engineers follow our every step as we scope out the clean body lines of Audi's new Q5 crossover. Audi's team is ready, with an answer to any question we might ask. There's good reason for this special attention: Audi's entry into the growing luxury small-crossover segment will do battle with tough players like the BMW X3, Acura RDX and the upcoming Mercedes-Benz GLK.

Ah, but Audi may have an upper hand over these rigs. Sure, the Q5 shares the new A4's brilliant chassis, and it's powered by a sporting 3.2-liter V6, too. But neither tech spec is this player's trump card. To us, this Audi might be the only truly handsome vehicle in the class. And if image-conscious luxury buyers agree, we just might have a new pack leader. —James Tate

The Specs

One could think of the Q5 as an A4 Avant that can wade through 20 inches of standing water and scramble across a mildly muddy two-track trail. The standard Quattro all-wheel-drive system has the same 40:60, rear-drive biased torque distribution, and the Q5 packs the same sweet 265 hp 3.2-liter V6 with 243 lb.-ft. of torque. The engine is paired with a ZF six-speed automatic, and Audi estimates the combination will net 17 mpg city and 24 mpg highway. If we're honest, that is a bit disappointing, especially when compared to the powertrains they'll offer in the homeland. German Q5s can be had with three of Audi's most impressive engines—the four-cylinder gasoline 2.0 TFSI, and two diesels: a thrifty 2.0 TDI or the powerhouse 3.0 TDI V6, which belts out 407 lb.-ft. of torque. Oh yes, they all get better mileage than our V6.

The Q5 cabin is nearly identical to the A4's, which is no bad thing. It is all quite intuitively designed, right to the flip-down rear seats, which are easily actuated from the cargo area. Only leather will be offered, and upscale niceties like a climate-controlled cup holder and ventilated front seats can be optioned. Audi's MMI (Muti-Media Interface) is much improved too, with small pop-up windows sliding onto the screen to note temperature or seat heat adjustments. The navigation system now shows details on buildings, and can be viewed in "bird's eye" format—quite chic, indeed. But we'd still like to have touchscreen controls.

The optional Audi Drive Select offers three preset modes that affect the steering response, shock stiffness, throttle response and transmission shift points. These can also be set to your liking on cars equipped with navigation. Opting for Drive Select means you'll get dynamic steering, which works with the ESP to make minute adjustments to keep the shiny side up.

Pricing hasn't been announced, but we know that the Q5 will be offered with two optional packages. The first will include bi-Xenon headlights and a power tailgate, and the second will offer Audi advanced key, Audi side assist, and a 14-speaker, 504-watt Bang & Olufsen stereo. There are numerous stand-alone options, like a panoramic sunroof, Audi drive select, adaptive cruise control, 20-in. S-Line wheels, and, for the discerning buyer, chrome dubs.

The Drive

The V6 offers brisk acceleration. But we were flat-out infatuated with the 2.0-liter TFSI four-cylinder engine offered in the rest of the world. It feels just as quick, and it's not as thirsty at the pump.

The dynamic steering system gives the Q5 responses like nothing in the segment. If it weren't for the high seating position, the Q5 might have you convinced you were driving an A4. Pushing the Q5 too hard in corners generates understeer, but we were surprised at the effectiveness of the ESP. The Q5's stability system will happily use the brakes to rotate the chassis nicely if it senses imminent disaster. Under just about any circumstance, the drive is confidence-inspiring and quite a lot of fun.

On the tech watch, Audi's side assist "sees" cars in the blind spot and triggers yellow LEDs mounted on the mirrors. The system works flawlessly, but we had to train ourselves to look for the dim yellow LEDs in bright sunlight. And frankly, if you're going to look that hard, you may as well just check your blind spot.

The Bottom Line

The Q5 does an incredible job balancing luxury with a genuinely sporting character. It's more than a strong competitor, but we'll have a truer sense of value when pricing is announced. Audi hints that a new engine will join the lineup for 2010 models. If you want our guess, that engine will be the 3.0-liter TDI that will soon appear in the Q7. And the Q5 is the small, luxury crossover we'd pick.