Twenty-one years after the first generation, the new M3 has the first-ever V8 engine mounted in a 3 Series destined for public roads. Lighter than the in-line six-cylinder of the previous M3 (by 33 pounds), this aluminum and silicon alloy unit features the latest generation of BMW's variable valve timing system, while introducing the one-butterfly-per-cylinder concept to improve overall throttle response.

Consider the great improvements in the chassis and the aerodynamic efficiency of the virtually bespoke body (it only shares 20 percent of the 3 Series Coupe's components), and it's obvious we are in the presence of a worthy enemy to the efficient and amazingly fast Audi RS4, which also has a state-of-the-art 414-hp V8 heart.

Each side has a golden motorsport heritage: BMW takes hard- and software from the F1 team, plus the profound know-how accumulated from decades of competing at the highest level in German Touring Cars (DTM). Audi has six-time Le Mans-winning technology as well as its legendary all-wheel-drive Quattro transmission, proven in the demanding World Rally Championships over two decades ago.

From the outside, the M3 seems to have an edge. The coupe provides a sleeker and sportier base to this incarnation. A convertible and sedan follow next year. Audi already offers soft-top and wagon versions of the RS4. But in either case, there are plenty of signs regarding what lies beneath: strong bulges, overstated wheel arches, large vents, dramatic exhausts and bumper-disguised deflectors mixed with M or RS inscriptions.

Time has passed the RS4 by somewhat, especially after the recent arrival of the inspired A5/S5, which will provide an even more daunting M3 competitor. But once inside, the Audi strikes back. Although a bit dated in appearance, its dashboard still shows the convincing build quality and materials Audi is renowned for. Extra marks come from the flat-bottomed steering wheel, the aluminum pedals and inserts, and from the Recaro sport seats with great side support (both the cushion and backrest).

The practicality advantage is also there, thanks to the two additional doors, but both rear passengers (the center spot is a joke) have no door or front seatback pockets to deposit personal items. Those in the back of the BMW appreciate more legroom (due to a wheelbase 3.9 inches longer), which compensates for the lack of headroom (remember, this is a coupe), and there are directional air ducts to help stay cool.

There's no real wow factor sitting behind the M3's wheel. Which would be disappointing had it not followed the M3 tradition. And if it wasn't for the dramatic numbers on the rev and speed dials (and the M badge), we could well be inside a 'normal' 335i... not that there's a whole lot wrong with that; there are soft-touch surfaces with convincing fit and finish just about everywhere.

This is the clash of two naturally aspirated V8 engines, both with 414 hp and roller-coaster torque (295 lb-ft as early as 3900 rpm from the BMW; 22 lb-ft more, but much later-5500 rpm-from the Audi). These are two of the few engines in the world surpassing the magical 100 hp per liter specific power barrier without using forced induction (and without the help of direct injection, in the case of the Munich missile).

They are both coupled to six-speed manual gearboxes, the Audi enjoying a quicker and smoother lever as well as a marginally closer ratio, making up for the Quattro transmission's extra weight. This generous yet balanced ammunition translates into gee-whiz performance, as the 4.8 seconds from zero to 60 mph-in both cases-illustrate (top speed is limited to 155 mph).

The first-ever V8 in a full production M3 has a bit of a Jekyll and Hyde personality, which can be an advantage. Under normal driving, it can go as smoothly as a 335i (even smoother, since the M3's tailor-made Michelin tires are not run-flat), with a firm but contained grunt coming from under the aluminum hood, the driver shifting happily between 3500 and 5000 rpm. If it's blood you're after, the recipe is simple: go beyond 6000 rpm before shifting and a new world is revealed, with breathtaking pace and an almost supernatural ability to digest corners (fast and slow), with that twitch in the rear end if really pushed.

This more dramatic driving style will reveal an attitude problem from the stick, which tends to get cranky when handled with urgency. BMW uses a multi-disc clutch system to split torque between the left and right rear wheels, transferring up to 100 percent to the one with grip. Damping is variable and can be adjusted automatically (or according to the driver's preference) from the EDC's three-option menu: Normal, Comfort and Sport.

Next to this button there is another command that disengages the stability program, an option also available in the Audi (either totally off, or with the traction control still in surveillance mode). Altogether, this fourth-generation M3 proves to be less intuitive to drive, it takes a bit more homework, but it also allows the driver to store his choices and execute them with a touch of the iDrive button set into the steering wheel. Pressing it makes the car's character go from 'traction-controlled, light-steering and comfortable' to 'brutal, hard-riding, wheel-spinning racecar' as well as all the other possibilities in between these two extremes.

It's a different ball game in the Audi. In everyday circumstances, 60 percent of the goods are delivered to the rear wheels. But a fluctuation of grip conditions between the two axles can change that to 15/85 percent or 65/35 percent, all courtesy of a Torsen limited-slip differential. The RS4 also relies on a mechanical solution for variable damping, included with this sport suspension package. An S button on the steering wheel spices up throttle response and tightens the lateral support in the driver's seat. It's easier to go really fast with the Audi, especially so in slippery or wet conditions where the all-wheel drive becomes a guardian angel. But even on twisting, full-grip mountain roads, it's clear that not only the response of this direct injection V8 is more emphatic, but also the steering seems to be more communicative (despite BMW's sophisticated steering potentially adjusted to the driver's preferences).

Braking is vital in these machines, but neither of them feature ceramic brakes (Audi offers them as an option; BMW could well be saving them for the probable, harder-core CSL version). While the stopping hardware handles daily needs neatly, the Nrburgring addict will have to sacrifice every third lap to recover from fade brought about by intensive use.

The M3 has an altogether more bourgeois pose when put alongside its predecessor and only shows full rage at the top end of the rev counter. In this rarefied environment, the experienced driver will have loads of adrenaline (after shutting down the electronic stability program) and will probably be able to outpace the RS4. But clearly, that will not be the case with the 90 percent of drivers for whom going Quattro means going faster.

2008 BMW M3

*Layout
Longitudinal front engine, rear-wheel drive

*Engine
4.0-liter V8, dohc, 32-valve, double VANOS valve timing

*Suspension
MacPherson struts, coil springs, anti-roll bar (f), multi-link system, coil springs and anti-roll bar (r)

*Brakes
Ventilated 14.2-in. cross-drilled discs (f), ventilated
13.8-in. cross-drilled discs (r)

*Wheels and Tires
8.5x18 (f), 9.5x18 (r)
245/40 ZR18 (f), 265/40 ZR18 (r)

*Dimensions
Length x Width x Height (in.):
181.7 x 71 x 56.1
Wheelbase: 108.7 in.
Curb weight: 3641 lb

*Performance
Peak power: 414 hp @ 8300 rpm
Peak torque: 295 lb-ft @ 3900 rpm
Top speed: 155 mph (limited)

2007 AUDI RS4

*Layout
Longitudinal front engine, all-wheel drive

*Engine
4.2-liter V8, dohc, 32-valve,FSI direct injection

*Suspension
MacPherson struts, coil springs, anti-roll bar (f), multi-link, coil springs and anti-roll bar (r)

*Brakes
Ventilated 14.4-in. cross-drilled discs (f), ventilated 12.8-in. cross-drilled discs (r)

*Wheels and Tires
8.5x18
255/40 R18

*Dimensions
Length x Width x Height (in.):
180.7 x 71.5 x 55.7
Wheelbase: 104.8 in.
Curb weight: 3696 lb

*Performance
Peak power: 414 hp @ 7800 rpm
Peak torque: 317 lb-ft @ 5500 rpm
Top speed: 155 mph (limited)

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By Joaquim Oliveira
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