Audi has announced the arrival of a new engine for its A3 hatchback and Cabriolet ranges. The 1.6 TDI replaces the 1.9-litre TDIe unit, giving the A3 nearly 70mpg economy.

The 1.6-litre engine is a new, common-rail unit, which replaces the 1.9-litre motor. Power and torque remain unchanged, despite the new engine's reduced size, which means 104bhp and 184lb.ft at the driver's disposal. As a result Audi claims the same 0-62mph time of 11.4 seconds and the new model achieves a 1mph higher top speed at 121mph. The big difference between old and new engines is fuel economy; the TDIe returned 62.8mpg but the new one will do 68.9mpg on the combined cycle. Carbon dioxide emissions drop from 119g/km to 109g/km.

To help achieve those savings Audi has also fitted its start-stop system and brake energy recuperation - both of which were first seen on the recently launched A3 1.4 TFSI. The start-stop system is claimed to offer the fastest engine restarting of any comparable system. Recuperation allows energy from braking that would otherwise be wasted as heat to be stored in the battery.

The 1.6 TDI engine is available across the A3 range; all models feature either air conditioning or climate control along with alloy wheels. The Sport boasts 15mm lower suspension and 17-inch alloy wheels while the S-line sits 10mm lower still and rides on 18-inch rims. Prices for the hatchback start at £17,485.

A3 Cabriolet buyers also get the option of the new engine, though performance and economy are slightly inferior to the hatchback, but it still returns 65.7mpg and 114g/km CO₂. The open A3 is priced from £20,645.

The A3 1.6TDI is impressively economical, but is Audi planning an even more frugal model? We wonder if aerodynamic bodywork, altered gearing and low rolling resistance tyres could bring the CO₂ emissions down to 100g/km or less.