Audi Korea on Monday debuted its smallest, cheapest sedan, the A3, hinting at fiercer competition in the nation’s soaring premium compact market thus far dominated by its two German rivals ― the BMW 1 Series and Mercedes-Benz A Class.

“We think the sedan design fits the Korean market better than the hatchback design in the premium segment,” said Audi Korea CEO Johannes Thammer, referring to the hatchback styling of BMW and Benz compacts.

“In the visual way, we have a good chance.”

The Audi A3 was launched as a hatchback in 1997 and was absent in Korea for the past decade. The sedan model, which was unveiled at the New York Auto Show last year, is the first A3 car to hit the Korean market.

The car has the same quiet but powerful 2.0 TDI engine as Volkswagen’s Beetle and Golf. It boasts 150 horsepower and accelerates from zero to 100 kilometers per hour in 8.4 seconds.

Its fuel economy is rated at 16.7 kilometers per liter, which compares to 18.5 of the 1 Series and 18 of the A Class. All three models are diesel-powered and priced from about 35 million won ($33,000) here.

Thammer, with more than 30 years of experience in the industry, predicted that foreign brand car sales could make up 17 percent of total car sales in Korea by 2018, as the import car market has grown 2 percent every year in recent years.

He added the gradual tax cuts following the Korea-EU free trade pact would continue to help spur sales of European brands here.

The CEO said the company aimed to sell some 1,000 A3 cars this year. Audi Korea has set this year’s sales goal at about 22,000 vehicles.

By Lee Ji-yoon (jylee@heraldcorp.com)