As Audi's RS range is 20 years old, the first sport utility vehicle gets the famous badge, says motoring editor Andy Russell.

Audi has found its niche doing just that... creating niche models that, alongside the mainstream models, bring something new and exciting to the brand to woo new customers.

It has seen Audi go from strength to strength in the UK and, as its model line-up keeps growing so do sales. Last year Audi was the fourth highest-selling marque in the UK behind Ford, Vauxhall and Volkswagen with 142,040 sales, up nearly 15% on 2012 – despite not having a single top-10 seller.

This year Audi's new milestone is 20 years since the first RS high-performance model based on a regular road car – and the latest to join the line-up is the RS Q3, its first RS Q model, which really puts the 'sport' into first sport utility vehicle. It's the next logical phase for the RS range and Audi's niche appeal with a new performance class.

You might think that, given the RS heritage for ultra-fast sports saloons, estates, hatchbacks and cabriolets, combining RS and SUV, sports car and compact soft-roader, might not work – but it does... and brilliantly.

Under the bonnet is the 2.5-litre, five-cylinder turbo petrol engine from the TT RS Coupe and Roadster and RS3. It may develop 'only' 310PS peak power – the TT RS and RS3 put out 360PS – but, boy, does it go, despatching the 0 to 62mph sprint in just over five seconds and much of that is down to the phenomenal low-down pull with a huge 420 Newton metres of torque surging in from just 1,500rpm all the way to 5,200rpm at which point all 310 horses are unleashed and just keep on going all the way to 6,700rpm.

Drive it and you soon realise why it is offered only with a seven-speed S tronic twin-cluth automatic transmission. One, it is an excellent gearbox, having the ability to shift manually via the lever or paddles behind the steering wheel and, two, this engine revs so fast and freely in the lower gears that you would need to be a pretty quick shifter yourself to keep up with a conventional manual box.

Drive gently and the RS Q3 feels quite docile poodling along in traffic on a light throttle but wind it up and the throaty bark from the single exhaust is magnificent – like thunder when you switch the standard drive select adaptive dynamics to dynamic, rather than comfort or auto, mode.

Drive like this all the time and it slurps the fuel – you could soon drop it into the high teens – but with a little restraint I managed mid to high 20s most of the time with a best of 34mpg on a gentle run. Even so fuel economy sets a new precedent for an RS model and this engine gets standard stop-start for the first time.

For all that power the RS Q3 is not about raw performance or brutal driving dynamics and is actually surprisingly refined – I've driven family hatchbacks that don't ride as well. And they don't have 18in alloy wheels with low-profile tyres – winter ones at that – and the RS-specific 25mm lower sports suspension so it corners flatly with huge traction and grip from the the standard quattro all-wheel drive that puts all that power down safely on the road. And it stops as well as it goes with huge perforated 365mm front discs hauling the speed off.

What I like about RS models is that they are tastefully tweaked, rather than in your face macho, with purposeful sports body styling touches. It is a similar story inside with RS accents such as grey gauges with red needles and contrasting stitching on the flat-bottomed sports steering wheel.

That means the RS Q3 is just as practical as the Q3 with fine driver egonomics, quality controls and the ability to carry four passengers, five as a squeeze, in shapely seats although legroom is quite tight in the back with tall adults up front. The 356-litre boot compares with a mid-size family hatchback and the 60/40 split seat backs fold down but the floor is much higher.

The RS Q3 fills a gap in the market for people who want huge peformance in a practical package and put MPH ahead of MPG. Even though it won't add big numbers to Audi's annual sales it will have huge appeal as a 'halo' model for the rest of the Q3 range.