THE bloke who said ‘you can’t beat cubic inches’ obviously didn’t work at Volkswagen.

The team from Wolfsburg is systematically shrinking the VW engine line-up in the interests of saving the planet – intelligent downsizing, they call it – and rather than hurting the marque’s performance credentials, it is adding a whole new layer of spice.

A smaller engine in a hatchback mean less weight over the nose, meaning a more balanced chassis and, potentially, greater power-to-weight ratio. Fun cars, not lead-tipped arrows.

The current case in point is VW’s new Golf flagship, the turbo-charged 2.0-litre four-cylinder Golf R, which has not only lost a couple of digits from its name compared with its V6 Golf R32 predecessor, but two cylinders containing about 1.2 litres.

Has that hurt it? You have to be joking.

This, the fastest showroom-stock Golf on the planet, boasting a 5.7-second zero-to-100km/h sprint time, is not only more rapid and more powerful in raw performance terms than the R32, but an all-round better conveyance due to superior technology and a 38kg weight reduction. And starting at $48,490 for the three-door manual, it is $7000 cheaper to boot!

In one fell swoop, VW has banished two of the previous R-rated Golf’s less-stellar attributes – a tendency to understeer in tight cornering and surprisingly high fuel consumption when pushed.

By contrast, the new Golf R changes direction more readily than a politician under pressure in the polls, and drinks in moderation.

The latest, third-generation R is still a relatively beefy 1476kg in manual guise (and add 20kg for the DSG auto) due to the 4Motion all-wheel-drive system it lugs around, which makes it a healthy 116kg heavier than the front-wheel-drive Golf GTI.

However, with 188kW/330Nm on tap from the new turbo four-cylinder TSI engine, courtesy of higher turbo boost and a steeper compression ratio, among other tweaks, the R is still more than capable of putting the 155kW GTI and other hot-hatch contenders in the shade.

Compared with the GTI, the Golf R is largely about traction, and thanks to a revised and more sophisticated Haldex AWD system that improves transfer of drive between the axles, grip becomes limpet-like.

On the recent Golf R media launch in Tasmania, this traction was put to the ultimate test in, frankly, marginal driving conditions on a snowy, slushy, unsealed mountain road in winter.

With the wipers brushing falling snow from the windscreen, GoAuto was anticipating a white-knucle drive, but the only uncontrolled drifts in evidence were of the snow variety on the verge of the road. Impressive.

Aided by manhole-cover-sized disc brakes (345mm on the front) and all the electronic nanny controls to keep the vehicle on the straight and – in this case, extremely – narrow, the Golf R descended from the mountains without a hair out of place (mind you, it really needed a bath).

Our test car was fitted with optional 19-inch alloy wheels (18s are standard) and matching licorice-strap tyres, which no doubt contributed to reduced compliance, but not so much that we could feel the shadows on the tarmac.

Lower by 10mm than the GTI (which itself is 15mm lower than standard Golfs), the Golf R rides on a firm but not teeth-shattering suspension that has that German knack of absorbing road surface punishment while maintaining easy composure, especially mid-corner. Yep, it’s good, and in this esteemed but small class, probably the best.

The five-door test car (three-door is also available) came armed with the optional push-button Adaptive Chassis Control ($1500) that can switch between normal, firm and comfort settings, but we have decided this option is a personal choice between you and your wallet. We were happy with normal, but some might want the hamburger with the lot.

The party trick of the R compared with its Golf GTI sibling is its dash out of corners. No scrabbling tyres, no steering-wheel-wrenching torque-steer or other histrionics – just turn the chunky GTI-style flat-bottomed steering wheel, plant the boot, wait momentarily for the engine to get on song and … whoosh.

On the ice-rink surfaces that we experienced in Tassie, acceleration could be subdued by the intervention of ESC, traction control and other safety nets, but a good thing too. With this amount of grunt, commonsense rules.

While no car is failsafe, the Golf R comes pretty close.

Like the GTI, the R’s steering is succinct, weighted perfectly and arrow sharp. It does not just telegraph road feel, it emails, sends a text and follows up with a phone call.

We sampled only the six-speed manual version on the test route, but that brings us to one of our few quibbles about the Golf R – the final-drive gearing of the manual.

While we realise that much of the fun to be had in the Golf R is due to the short gearing in league with the close-ratio transmission matched with free-spinning engine, we lost count of the times we tried for a higher gear – the non-existent seventh – on the highway bits.

The engine revving at about 2400rpm in sixth at 100km/h just seemed a tad excessive if the gearing is the same in Europe, it must really scream at German autobahn speeds.

While we couldn’t nail down the difference in final drive gearing between the manual and DSG-auto-equipped models, we could at least discern that the DSG version’s gearing is taller. This seemed to be borne out by other journalists on the launch, who indicated the DSG-equipped R seemed more relaxed at cruising speed, honking along at roughly 2000rpm at 100km/h.

When you consider the slick DSG version accelerates from zero to 100km/h about 0.3 seconds quicker than the manual and returns the same fuel economy of 8.7L/100km, the choice seems pretty clear.

Whichever transmission you choose, the R’s engine is a stonker, living life in the fast lane. This highly-strung turbo four isn’t at its best between idle and 2000rpm, especially as torque does not come on strong until about 2400rpm.

But from there, it is all bliss, with the rev-limiter coming up at a frightening rate in the manual, especially in the lower gears. The DSG, of course, will simply snap another cog and keep heading to nirvana.

Fuel economy is said to be 8.7 litres per 100km on the official combined test, but the reading from our stint over more than 200km of hilly and downright mountainous terrain looked more like 12L/100km. With a big turbo serving the party, the drink bill is going to hurt a bit, but not nearly as badly as the big-bore R32’s thirst that took the shine off an otherwise brilliant car for some owners of the previous Golf flagship.

Inside, the R fit-out is pure GTI, bar a couple of exceptions, including light grey microfibre inserts in the seat upholstery with grey stitching to break up the omnipresent blackness, plus silver metallic-look panels in the dash and doors that also lighten the mood compared with the shiny carbon black items of the GTI and its GTD diesel stablemate.

Our test car had the optional ($1300) Vienna leather trim – another moody sheathe of blackness but unabashedly classy. These high-sided sports seats are standard fare in sports Golfs, and when a car-maker sets standards like that, who needs more.

Would we bother forking out another $5300 for the optional boy-racer San Remo bucket seats? Not a chance. Like the suspension, the default setting will do just nicely.

We are talking about a Golf here, so take it as read that the instrument layout is first class. Glowing blue needles on the speedo and tacho serve to remind you that you are driving something special, as does the 300km/h speedo.

Externally, the gaping wide-mouthed lower grille, LED day-time running lights, gloss black mirrors, dual exhaust tailpipes centrally mounted in a rear diffuser (like the previous model), wider sills and 18-inch Talladega alloy wheels set the car apart from, say, a mere GTI.

Bi-xenon headlights with washers are standard, as are parking sensors with the Optical Parking System displayed on the navigation display to aid reversing. Electric-powers seats are optional, as is sunroof.

Safety is a given, with a full complement of airbags and all the latest five-star safety systems to put the mind at rest.

VW expects the sales ratio of three-door and manual cars to be higher initially as early adopter enthusiasts step up to the plate, trending towards more five-door and DSG-equipped volumes as things settle down.

Incidentally, the three-door R weighs the same as the five-door, so it probably only looks faster.

The new, sharper pricing of the Golf R has not only thrown a curve ball for rivals such as Subaru’s $61,990 WRX STI and Mitsubishi’s similarly priced Lancer Evolution, but also VW’s own potential GTI owners.

With the gap between the models now down to about $10,000 for both three and four-door variants, temptation looms.

Before we wrap up, you might have been wondering why the change in nomenclature, with VW dropping the engine size from the ’R’ badge. Simply, it didn’t look good – some buyers might frown on a step back from R32 to R20.

Be reassured: in VW engineering terms, bigger is not always better.