If you want to be taken seriously as an automaker these days, building a competitive compact crossover is an absolute necessity. Vehicles like the Honda CR-V and the Toyota RAV4 contribute significantly to their respective monthly sales, and even the all-new Mazda CX-5 has done a great job of bringing customers into showrooms. If you need further proof of how important the segment is, consider this: even Audi, BMW and Porsche are designing vehicles to compete in this segment.

Hyundai has been in the segment for a while now, with its Santa Fe compact crossover debuting in 2001. While sales have grown over the years, Hyundai still sells a fraction of the volume enjoyed by other segment competitors. Through July, Honda sold some 167,236 CR-Vs, and Toyota moved 104,686 RAV4s. Hyundai, on the other hand, has delivered just 39,059 Santa Fes this year.

To increase its competitiveness in-segment, Hyundai is launching an all-new Santa Fe line for the the 2013 model year. The new five-seat Santa Fe Sport will be the most comparable to the current Santa Fe, while a longer wheelbase 2013 Santa Fe (with three row seating) will replace the outgoing Hyundai Veracruz. Both the new Santa Fe Sport and the new Santa Fe share similar styling inside and out, with the biggest differences being in seating configuration and available engines.

The Santa Fe Sport has begun appearing at local Hyundai dealers, and Hyundai recently flew us out to Park City, Utah, to drive the new model at (relatively) high altitude. Elevation is the enemy of performance, so Hyundai wanted to showcase that its new 2.0-liter turbocharged Santa Fe was more than up for the challenge. While the cars we drove all came with the higher-output engine and all-wheel-drive, Hyundai’s Santa Fe range will begin with a normally-aspirated 2.4-liter engine and front wheel drive.

While we didn’t sample this configuration, it sounds promising on paper. The 2.4-liter engine makes 190 horsepower and 181 pound-feet of torque, and still manages to deliver an estimated 33 mpg highway and 22 mpg city in front-drive configuration. Opt for all-wheel-drive, and fuel economy drops a bit to 28 mpg highway and 20 mpg around town.

After driving the optional 2.0-liter turbocharged engine, however, we can tell you that this is our preferred pick, especially in all-wheel drive. The forced-induction engine makes an impressive 264 horsepower and 269 pound-feet of torque, producing spirited acceleration even at an altitude of 8,400 feet. There isn’t a huge penalty in fuel economy, either, with the FWD 2.0T returning 31 mpg on the highway and 21 mpg in the city, and the AWD version delivering 27 mpg highway and 20 mpg city. Unless your budget simply can’t handle the increase in price, there’s no reason to shop anything but the 2.0T AWD models.

Speaking of all-wheel-drive, the Santa Fe Sport (and Santa Fe) will utilize a system developed by Magna Powertrain called Dynamax. Without going into too much engineering detail, it uses an electro-hydraulic coupling to split torque front to rear based upon driving conditions. It’s predictive, based upon information delivered by vehicle sensors, and can provide both torque vectoring and individual wheel braking for the maximum amount of traction. Systems like this always sound good on paper, but we can tell you that this one works at an impressive level in the wild. On a dirt and gravel fire road, there was virtually no wheelspin even under hard acceleration from a standing start. Turn off the stability control, however, and the system still allows a driver to enjoy a bit of tail-out fun in corners, though this is probably not a key requirement for most customers shopping a compact crossover. Perhaps it’s just best to say that we were very impressed with the Santa Fe Sport’s handling and composure on low-traction surfaces.

We were also impressed that the AWD Santa Fe Sport comes with features like an electronic differential lock for maximum traction on loose surfaces, and a hill descent control for tackling steep and slippery grades. That doesn’t mean the Santa Fe Sport 2.0T (which comes with 19-inch wheels and 55-series tires) is intended for hard-core off-roading, but it does mean that it will stand up to a winter weekend in the mountains or a summer drive on the beach. Fire roads and easy trails won’t cause much drama, but the lack of skid plates would give us cause for concern if the trail got too rough.

Outside, the Santa Fe Sport carries on with Hyundai’s latest “Fluidic Sculpture” styling, now in its “Storm Edge” phase. We’re not designers, but we can appreciate the sense of motion that it conveys, and would be the first to tell you that it’s the best looking Santa Fe that Hyundai has ever penned. In fact, we find it to be one of the best looking crossovers on the market today, thanks in part to design touches like the low daylight opening and rising beltline, as well as the flowing headlights (with LED accents) and wrap-around taillights. While customers may have shopped the 2012 Santa Fe in spite of its styling, there’s no doubt that some will shop the new model because of its lines.

That sense of style carries over to the cabin as well, and were suitably impressed with the Santa Fe’s attention to detail. The rear of the armrest, for example, carries a metallic Santa Fe logo badge. You see this when opening the door, but not while seated inside; if Hyundai obsessed on this styling flourish, how much did they sweat the rest of the interior details? We can’t answer that, other than to say the perforated and power adjustable front seats were all-day-long comfortable, the Infinity Logic 7 audio system was superb, the driver-selectable steering function provided noticeable variations in steering effort and the cabin was the quietest we’ve experienced in a compact crossover to date.

In fact, you’d be forgiven for thinking you were driving a luxury crossover, since the Santa Fe Sport really is that good. On pavement, the ride is on the firm side, but never harsh, even over broken pavement. Carry speed into a corner and you’ll get noticeable body roll, but this just reminds you that you’re driving a crossover and not a sport sedan. Thanks in part to the torque-vectoring AWD, cornering limits are higher than any sane person will test on the street, and there’s enough capability to keep things interesting for those of us who love to drive but need the capabilities of a crossover for day to day living. If we had to state a few gripes, throttle response could be better and transmission kick-down could be quicker, but both of these are minor points that don’t really detract from the driving experience.

There’s something else about the Santa Fe Sport, and Hyundai in general, that’s a bit harder to define. We’ve seen the evolution of Hyundai’s vehicles in recent years, with each new model carrying the Korean automaker one step further in refinement. From that perspective, the Santa Fe Sport is a home run, as it feels like the most polished non-luxury model that Hyundai has ever turned out. We like the direction it’s going in, and we believe that its new Santa Fe Sport has the goods to challenge any other compact crossover on the market today.

Santa Fe Sport models are arriving at dealerships now, priced from $25,275 including a destination charge of $825. The AWD 2.0T we drove had a base price of $30,275 and came with the $2,450 Leather & Premium Equipment Package (side mirror turn signals; leather seating surfaces; powered passenger seat; sliding & reclining rear seats; dual automatic climate control; rearview camera; auto-dimming rearview mirror with integrated Homelink and compass; premium sill plates), the $2,900 Technology Package (panoramic sunroof with tilt & slide; navigation system with 8-inch display; XM NavTraffic; Infinity audio system; heated steering wheel; manual rear window sunshades), the $100 Carpeted Floor Mats, the $50 Cargo Net and the $150 Cargo Cover, for a total sticker price of $35,925.