In 1999, Audi expanded the range with the introduction of more powerful versions: a 1.8 Turbo with 180PS (132kW)) and a 1.9 I4 TDI Diesel with pumpe-düse technology and variable geometry turbocharger. The four-wheel-drive A3 1.8T quattro used either the 150hp (110kW) or 180PS (132kW) engine and the same Haldex Traction-based all-wheel drive system as the Audi S3 and the Audi TT. 1999 was also the year Audi was forced to bow to market demands and introduced a hastily-conceived five-door body that the company had not previously intended to produce.
In late 2000, the A3 range was revised with new headlights and rear light clusters, other minor cosmetic changes, an improved interior, and the introduction of a six-speed manual gearbox, on the 180PS (178hp/132kW) 1.8 Turbo and the brand new 130PS (96kW) 1.9 TDI. Audi's ESP (Electronic Stability Programme) traction-control and brake force distribution computer became standard equipment. Sadly the A3 was never offered with the most powerful 1.9TDI engine, the 150bhp unit offered in the VW Golf GTI and SEAT Leon FR.
Although the Audi A3 was replaced in Europe during 2003, the first generation model continues to be sold in developing countries. After production of the first generation model stopped in Brazil, the retail price increased from R$60,000(US$30,000) to R$100,000 (US$50,000).
The engines used are the same as for many other cars in the Volkswagen Group.
In the 2003 Geneva Motor Show, Audi launched the second-generation of the A3, the Typ 8P, designed by Walter de'Silva. Originally launched only as a three-door hatchback with four cylinder engines, it featured a new automobile platform (the PQ35 platform), a redesigned and more spacious interior, new petrol engines with Fuel Stratified Injection (FSI), and standard six-speed manual gearboxes (except on the base 1.6).
In mid 2003, the line was updated with two sports-orientated models, a 2.0 Turbo-FSI version with 200PS (197hp/147kW), and a 3.2 VR6 engine (for the first time) with 250PS (247hp/184kW). Haldex Traction-based quattro four wheel drive, and the S-Tronic semi-auto gearbox were introduced as optionals (quattro is standard on the VR6) on every model 140PS (138hp/103kW) and over.