MERCEDES-BENZ is in the midst of an almighty battle with its two biggest rivals – Audi and BMW – for global luxury-car supremacy, with each of the three German auto giants expanding their line-ups with all-new models in a bid for the sales crown.

BMW beat Audi and Mercedes to the punch in the premium compact SUV segment in 2010 with its 3 Series-based X1 followed by Audi in 2012 with its A3-based Q3.

Mercedes may have taken a while to join the club, but it has come out with all guns blazing with its GLA-Class SUV that has landed in Australia this week.

The GLA is available in just one specification only at launch, with the more generously specified GLA250 4Matic expected in July before the sizzling GLA45 AMG arrives in October, a result of global demand and right-hand-drive production timing.

Kicking off the line-up is the GLA200 CDI diesel at $47,900, plus on-road costs, which compares well against its immediate rivals.

Audi’s Q3 – the top-selling small SUV over $40,000 in Australia last year – is priced at $47,500 for its base diesel model, while the equivalently specified BMW X1 sDrive 18d starts at $46,300 and the Volvo V40 Cross Country D4 Luxury is $47,990.

Other less obvious rivals include Mini’s entry-level Countryman diesel which is priced well below its German counterparts at $37,100 for the Cooper D, while the Range Rover Evoque eD4 Pure oiler starts from $49,995.

Mercedes is offering a sizeable standard equipment list, even in base CDI guise, which further improves the value equation.

A power tailgate, satellite navigation, reversing camera, front and rear parking sensors, Nappa leather steering wheel, ambient lighting, park assist, rain-sensing wipers, auto headlights, paddle shifters, idle stop and tinted windows just scratch the surface, with a number of options packages available should you require more luxury.

In the flesh, the GLA has the look of a chunky, jacked-up A-Class which is not far from what it really is. Mercedes has included SUV design cues so you don’t confuse it for its little brother, including black plastic moulding around the base of the car, roof rails, big wheelarches and bonnet divots.

It may not have the height of the Q3, but the GLA is a very attractive looking package, particularly when viewing its pert rear end.

The cabin is unmistakably A-Class, particularly the dash with the cool air vent design, high-set tablet-like display and chunky three-spoke steering wheel.

There is a high-quality feeling to the cabin, without seeming overly high-end, but the design is appealing to behold and the controls offer excellent functionality.

Once in the front seat, there is a sense of being quite low to the ground in the GLA which is the opposite of what a lot of people desire in an SUV and occupants with longer legs may get the feeling their feet are sitting forward in the footwell (as you might feel in sportscar), not down.

There is not that same sense of being able to tower over traffic as you can in more traditional SUVs and crossovers.

Taller folk may feel a touch cramped owing to the sloping windscreen which intrudes slightly on front headroom, but overall it is adequate.

Taller passengers may also feel short-changed in the rear, with average headroom and legroom, although it is not as dramatic as in the CLA with its sloping rear roofline.

Smaller occupants should feel reasonably well catered for in the rear and Mercedes has included air vents for extra comfort.

The GLA offers 421 litres of cargo space which is just one litre more than the BMW X1 but 39 litres less than the Audi Q3 that can hold 460 litres of gear.

Mercedes has included a feature it calls the “cargo position” which expands the boot space thanks to a lever in the rear that extends the backrest out on a 90-degree angle. While this adds a bit of extra space for stowage, it makes for a very uncomfortable seating position in the rear and should only be limited to youngsters on very short trips.

The 200 CDI comes standard with Artico man-made leather covered seats which offer decent levels of support, although they could do with more lumbar support. The AMG leather performance seats that are part of the $2490 AMG line package are snug and feel a lot more premium than the regular seats and would be our choice if you can stretch the budget.

Under the creases, or in Mercedes-speak, “powerdomes” on the bonnet, the GLA features a 2.2-litre four-cylinder diesel unit producing 100kW at 3400-4000rpm and 300Nm at 1400-3000rpm.

There is noticeable turbo lag upon take-off, but once the oil-burner is up and running it offers enough power to comfortably overtake at speed. With a 9.9-second 0-100km/h sprint time, the 200 CDI is hardly fast, and if sprightly straight-line performance is a priority, then hold off until July for the arrival of the petrol-powered 250 4Matic. While the A-Class was criticised at launch for its slightly jittery ride, Mercedes has fitted the GLA with a standard “comfort” suspension for a softer tune which makes for a more comfortable and compliant ride than its sibling while managing to soak up bumps and corrugations with ease.

The test was conducted on a particularly wet day in the Yarra Valley to Melbourne’s east, and the GLA mostly kept its cool on some rather twisty roads, with the 18-inch alloy wheels proving a good match and the stability control keeping the car in check.

We did encounter some light understeer, but it did not hinder the overall drive experience.

Steering is sharp and direct and felt nicely weighted, but lacked feedback, while the seven-speed dual-clutch transmission proved a good match for the front-wheel-drive GLA with smooth, quick changes.

Official fuel consumption for the oil-burning GLA is a claimed 4.6 litres per 100 kilometres, and we recorded 6.1L/100km over the day of testing which is a strong result given the conditions.

While the GLA doesn’t look as much like an SUV as the Audi Q3, it at least offers some crossover styling cues for people that love the look but do not care to go rock-hopping.

It may even appeal to potential A-Class buyers who are drawn to the chunky styling and extra cargo space.

Mercedes says it could easily sell double its 2014 allocation of 1000 GLAs in Australia if it had access to more stock, and given the demand for its A-Class and CLA siblings, we are inclined to believe them.

Value-wise, the GLA in diesel guise is on par with its closest rivals, and its decent standard features list should make Audi and BMW a little nervous.

Add to that a comfortable ride, good fuel economy and decent diesel performance, and Mercedes could be on to a winner.