DIESEL engines are slowly gaining a foothold in Australia with more drivers choosing fuel-economy over performance, but as many manufacturers have shown – with modern turbocharging, common-rail injection and lightweight design – compression ignition engines are no longer a performance compromise.

SUVs are the strongest candidates for diesel sales in Australia with small car sales still lagging, but Mazda hopes it can turn the tide for the segment by introducing a variant more focused on performance and luxury than purely economy.

The previous manual-only Mazda3 diesel struggled in auto-centric Australia, but Mazda has not repeated the same gaff with its new XD Astina.

Its new power-boosted 2.2-litre diesel Mazda3 is now available with an automatic transmission and we think the combination is a perfect match.

Firstly lets talk about the engine because its SkyActiv-D four-cylinder is the biggest change to the latest Mazda3 variant.

With two turbos for handling either end of the rev-range, lag has been all but eliminated. The swathe of torque is available right from the first turn of the XD Astina’s 18-inch alloy wheels and the flexible motor will rev happily up to 5500rpm - unusually high for a diesel.

With 420Nm of torque on tap the XD has bountiful mid-range grunt and hills can be negotiated with the same pace as completely flat roads.

Revving to the governor wasn’t really necessary with such good low-rpm characteristics, but if a rev-wringing petrol engine driving style was desired, the diesel happily responded.

Mazdas ‘active engine sound’ plays a synthesised engine note through the sound-system and is most noticeable at higher rpm with a more petrol engine tone, which was impressive if not a little dishonest.

Its natural engine noises were a little rattly under low load but we liked the unpretentious diesel grunt when the strong diesel was made to work hard.

Mazda officially states the zero to 100km/h drag as 7.7 seconds (manual) but it is in-gear acceleration where the diesel Mazda3 performs best. At speeds around the freeway limit, only one gear is needed with a combination of abundant torque and wide rev-range allowing strong acceleration without fuss.

At cruising speeds the diesel settles down to a relaxed and almost completely silent 1500rpm, returning fuel economy figures about the 6.5 to 7.0 litres per 100km mark.

Getting close to the official 5.0L/100km figure is more plausible given lower speeds and more stop-start driving, when the i-Eloop regeneration and i-Stop idle-stop technology comes in to its own.

Casting the new diesel from aluminium and incorporating other Skyactive weight-saving technology has stripped 42kg out of the engine compared to the last 2.2-litre diesel, which has preserved the excellent Mazda3 range handling.

On very tight corners the Mazda3 XD is quite at home with sure-footed grip and a resistance to bump-steer on unforgiving surfaces. Even when the road ahead becomes slippery the excellent chassis handled the diesel torque well allowing all of it to get to the road with ESC rarely intervening.

A little wheel slip and traction loss made us feel like we were doing all the work rather than electronics mopping up our mistakes, which enhanced the drive significantly.

Longer faster bends are dealt with in the same effortless manner with as much body-roll as expected from a small hatch but unfailing grip and poise.

We are very pleased to see the Mazda3 road-holding and fool-proof nature unspoilt by a heavier diesel engine up front - particularly impressive given that only the rear dampeners have been fettled for the new variant.

We particularly liked how Mazda has not followed the lead of many with numerous confusing driving modes, instead opting for just one setting. The decision demonstrates that in many cases a carefully developed chassis and engine will suffice for all situations.

The top-spec XD Astina wears the largest 18-inch wheels which does let a lot of road noise through to the cabin but we would happily sacrifice a little ride comfort for the confidence inspiring grip afforded by the wide tyres.

It is a shame this variant is the only Mazda to get the diesel/manual combination because flicking through the six-speed gearbox with bespoke ratios for the diesel is a treat with a substantial and precise selector.

But the automatic transmission needn’t be a compromise for the driving enthusiast and with paddle shift changes from the steering wheel and diesel-developed ratios the automatic does a great job shifting quickly and with little delay when in manual mode.

Left to its own devices the auto behaves intuitively and resists clicking down as a petrol-paired transmission might, to make good use of the diesel's low-down torque.

The XD Astina gets its own unique interior with a gorgeous black leather/suede upholstery replacing the SP25 Astina’s all-leather seating. The red stitching sets-off the luxurious suede cushions and looks as good as the seating feels with good side support and firm filling.

The red stitching and leather continues on the ergonomic steering wheel and only a black roof-lining in place of the un-sporting beige could have made the cabin a nicer place.

We particularly liked the central and dominating tachometer, which conveyed the sporty bias of the XD and, while the head-up display is useful, it looks a little low-tech compared to some other manufacturer's designs.

Mazda’s MZD control system is very easy to use requiring just a few inputs to find the required menu or information and was easy to learn, but navigation was easily confused and kept trying to take us on unnecessary detours to dead ends.

Generally speaking the equipment levels are excellent with plenty of useful features like adaptive cruise control and active safety systems, and a lack of gimmicky kit was refreshing.

A middle of the range diesel variant without all of the Astina kit would offer an economical but fun option at a more competitive price, but Mazda says that would damage the status of the Astina as the halo model.

In the absence of an MPS, Mazda’s XD Astina is the pick of the Mazda3 range. It might not be as quick on paper as the SP25 variants but in the real world where mid-range grunt and mile-munching ability really matter, the diesel wins hands-down.

Its performance incentive is bolstered by range-leading equipment, while likeable Kodo styling, excellent handling and day to day practicality leave little to ask for if you are willing to stump the cash.

And that will be this variant’s only undoing. Volkswagen’s excellent $34,790 Golf 110TDI Highline equals the Mazda for performance and refinement, its interior is plush and well equipped and the price undercuts the XD Astina by $7440.

For about the same investment, competitors from more premium makers become a possibility with Alfa Romeo’s Giulietta Distinctive JTD at $35,250 and Audi’s $42,500 A3 TDI Ambition creepiong into the fold.

But Mazda has a strong following in Australia and deservedly so. The new Mazda3 XD Astina proves that a flagship high-performance small hatch doesn’t always need spark-plugs.