The already blurry definition of an SUV is thrown right out of focus by the launch of Audi’s all-new Q2. What used to be referred to as a ‘crossover’ Audi will now tell you is the world’s first premium sub-compact SUV, and who are we to argue? Even if this is an SUV with a 1.0-litre engine and front-wheel drive as standard.

In truth the definitions are arbitrary. Audi can, and does, do what it likes, and invariably seems to do it very well.

The Q2 is the real world evocation of the Crosslane Coupé concept we saw at the Paris motor show in 2012. But three doors have been replaced by five, the Targa roof is gone (if not wholly forgotten), and as yet there is no hybrid powertrain.

Based on the MQB platform that supports the smaller end of Volkswagen’s empire, the Q2 is 130mm shorter than the A3 Sportback, but taller and therefore comparably roomy. An increased ride height gives it the slightest suggestion of SUV-ishness from the kerb, but in road-going reality this is another pumped-up hatch in the vein of the Mercedes GLA and Mini Countryman.

Ideas like this underscore Audi’s intent that the Q2 sits one removed from its more obvious rivals...

None of which is a bad thing. The Q2 looks great, actually markedly better in the metal than it does in print. Its floating roof, a nod to the original Targa concept, gives it a lightness and dynamic edge noticeably lacking in the rotund and slightly clumsy Q3. This also serves to make the whole car look lower, and therefore a bit more sporty.

Inside, it is all typically peerless. Audi continues to produce interiors that both look and feel — actually even smell — superb. Touchpoint quality is second to none, as is the ergonomics of both driving controls and inboard technology. Everything is solid, genuinely premium in feel and exactly where you want it. There are some bold design touches, too, such as ambient lighting and illuminated trim sections that give the whole cabin an expensive, otherworldly glow. Although only standard on the top spec S-Line models, ideas like this underscore Audi’s intent that the Q2 sits one removed from its more obvious rivals like the Nissan Juke and Mini Countryman.

On a more practical front, space is also impressive for a car with a relatively small footprint. Even with over six feet of driver there is just enough room for the same behind him, thanks to that tall roofline.

There’s plenty of room for luggage, too, with more space to play with than the larger A3 can offer, rising to a decent 1,050 litres with the rear seats folded flat.

So this is a compelling little package so far. It’s attractive, versatile and convincingly premium, and on the move it’s more of the same. Even with the entry-level 1.0-litre three-cylinder engine the Q2 is surprisingly perky. Mated to the more mainstream 1.4 TFSI, with 148bhp and 250Nm of torque fed through VAG’s latest seven-speed S-tronic gearbox, it feels like there’s more than enough on tap for a car of this size, with power delivery smooth and quiet even under a fairly aggressive right foot.

Plump for the 19in option and a bit of broken asphalt and it probably will be a different story.

The 1.4-litre unit is also equipped with a cylinder limiting device, shutting off half the bank when full power is not needed. This system saves fuel and reduces emissions, which would be a price worth paying for a little hesitation in engine response, but as it is the switch is almost imperceptible.

Steering is light and fast, too, with Audi’s progressive variable-ratio steering fitted as standard, and while it feels a little artificial when really leant on, the majority of buyers will appreciate the day-to-day benefits of its lightness and immediacy around town.

Pushed through some faster corners the Q2 is largely free of the sort of body roll that plagues some larger SUVs, and it’s impressive that this comes without the compromise of overly stiff springs. All in all, the Q2 seems to ride beautifully, with very little chatter coming through the steering or suspension, even on the S-Line’s 18in wheels. But we had near perfect Swiss road surfaces to enjoy. Plump for the 19in option and a bit of broken asphalt, and it probably will be a different story.

At highway speed, meanwhile, the cabin refinement is predictably excellent, with little wind or engine noise intruding from petrol- or diesel-engine options. Despite its small footprint and suburban pretensions the Q2 feels like the sort of car you could comfortably lay down some serious miles in.

On the value front, we expect the base 1.0-litre model to be priced competitively, while the 1.4-litre FSI with the seven-speed S-tronic auto and quattro four-wheel drive will jack that up further. However, you might want to hold out for the 2.0-litre FSI, inbound a little later in the Q2’s life cycle.

Whatever combination, whatever application, the Q2 is watertight. Audi may want to stick its flag in a niche of its own making, the domain of the premium sub-compact SUV, but however you spin it, this is a rock-solid product that has set the bar impressively high.