IT may be the smallest car to wear the coveted AMG badge but the new Mercedes A 45 has a mighty sting in the form of the world's most powerful four cylinder engine.

Pumping out an incredible 180bhp per litre the 1,999cc engine in the A 45 is in a league of its own.

Not even supercars have such specific power outputs and allied to all-wheel-drive the new Mercedes is more than a match for the likes of the exclusive Audi RS3 and BMW's very quick 135i M.

Priced from £37,845 the A 45 AMG will be arriving in August to become the high performance flagship of the A-Class range.

With a seven speed dual clutch auto box as standard the car can ratchet up the 0 to 60 sprint in around 4.5 seconds and has its top speed electronically pegged to 155mph.

Pushing a two-litre engine to develop 360bhp is an incredible achievement and with masses of grip available this is a car which redefines the hot hatch market. Only the McLaren P1 with its petrol-electric 3.8-litre V8 engine pumping out 903bhp has more power per litre - and that is car which is set to cost an incredible £800,000.

For a car which is a 20 of the price, the A45 AMG offers awesome performance and is cutting edge technology.

In sport mode the A45 packs a mean punch with an enhanced grunt for the exhaust on the down shifts for some extra fun.

Switch the drive setting to comfort and the gear changes are less rapid while the car's eco mode activates a stop/start system to improve efficiency in traffic.

Mercedes claims the A 45 is good for 40.9mpg on average with emissions of 161g/km but on a brisk run in Germany we managed just 26 to the gallon. Even in the comfort setting the return was no better than 32mpg.

Nevertheless that would trump rivals by some margin and on the road the Mercedes rides in a very composed fashion.

The steering is nicely weighted with a precise touch while the steering wheel itself is finished in racing car fashion. Not only does it feel great but there is plenty of feedback.

Body hugging AMG Performance Seats are standard and the dash has a carbon fibre effect textured finish.

With red seatbelts, red stitching and highlights in the trim and illuminated AMG logos in the kick plates the A 45 has a cockpit which looks the business.

As a five-door it is roomy enough front and back and its proportions are the same as the regular A-Class but set off with a sporty front bumper and three air dams to feed the turbo system.

Additional aerodynamic tweaks include flared sills along with a rear wing for extra downforce. At the back there are vent slats in the bumper combined with pronounced exhaust nacelles yet at a glance the styling is quite conservative.

Under the body the AMG version of the A-Class has a specially designed rear axle to improve rigidity.

Damper and suspension settings are tuned for performance and so too are the brakes which are uprated to cope with the mighty power and deliver plenty of stopping power rapidly.

Cornering is helped by a torque vectoring set up which Mercedes call Curve Dynamic Assist which works through the car's electronic stability system to improve grip through a bend.

The ESP itself is variable and can be switched off for track work but we found it not unduly intrusive in everyday driving and the AWD system coped impressively on the road.

In normal set up the A 45 is a front wheel drive car but the drive varies automatically with the power capable of being split 50-50 front to back.

Put through its paces and the car is a gem to drive with great balance and when needed the acceleration is pure AMG - very rapid but very controllable.

At one end of the scale AMG has the incredible £170,000 SLS roadster in its stable and with the A 45 it is reaching out to a new audience by making a car with all of its hallmarks but which is much more affordable.

The company has a cherished reputation as the performance arm of Mercedes and its reputation for hand built engine technology and cutting edge engineering is all apparent in the A 45.

Later in the year the AMG line up will be extended further with the arrival of the CLA 45 based on the Mercedes CLA four door coupe.

It shares the same powertrain and matches the A 45 for performance.

On the one we tried the ride was more mature than the hatchback and more in keeping with the larger saloons AMG has developed.

It has an appeal of its own especially with a spectacular tail lamp display and meaty body styling.

Prices for the CLA 45 have still to be announced but can be expected to be slightly above those of the hatch.