According to reports, Mercedes Benz will be launching a brand new A45 AMG with the intention of competing with Audi’s RS3 and BMW’s recent M135i offering.

The A45 AMG features  a transverse 2.0-litre turbo four producing as much as 330 horsepower and over 300 pound-feet of torque which just about levels it with the competition.

However, it is produced from less displacement due to input from Mercedes’s High Performance Engine offshoot based in Brixworth, England that provides the power for the company’s Formula One racing team. This makes the new engine the most powerful four-cylinder ever fitted into a Mercedes production model.

Autocar, who first revealed the details states that: “the A45 AMG channels its drive through a seven-speed dual clutch gearbox and, in a layout that mirrors that of the RS3, a specially tuned Haldex-style multi-plate clutch to all four wheels.”

The upgraded interior will see unique front sport seats along with more upmarket trims.

The car is scheduled to go on sale in early 2013 with a price tag expected to start at £32,000.

The launch of Mercedes’s A-Class, saw the car manufacturer seriously enter into the premium hatchback segment and it is clear the the German auto manufacturer intend to make it a touch competition.