In the three decades since the surprise arrival of the first Volkswagen Golf GTI, the performance car world has moved on a bit. Back in '76, all Wolfsburg had to do to grab everyone's attention was apply a bit of matt black paint here and there, find some fancy alloys and drop a 1588cc, fuel-injected four with just 110bhp into Giugiaro's 'folded paper' bodyshell. These days a hot hatch needs twice as much power, or it isn't even trying.

There's no chance of that accusation being levelled at the R32. Volkswagen's newest hot Golf boasts no less than 247bhp from a revised version of the 3.2-litre narrow-angle V6 that it shares with a variety of other Volkswagen group products, including the Audi TT and a significant in-house rival, the A3 quattro Sport. Like those Audis, the Golf R32 deploys its power through either a manual or a DSG automatic gearbox and a four-wheel-drive system controlled by a Haldex coupling, which uses a hydraulically-activated multi-plate clutch to transfer drive to the rear wheels when the fronts start to spin.

Pile on enough revs before side-stepping the clutch from a standing start and you can feel the front wheels spin momentarily, but after a brief chirrup from the Michelins the Haldex system sends the excess tractive effort to the rear wheels, where it can be best utilised. So despite its ridiculously porky kerb weight - at 1590kg, the R32 is heavier than a Mercedes E200 - it's said to achieve the 0-60mph sprint in just 6.5 seconds.

And the DSG auto box, a £1300 option, shaves another three tenths off that. Add the DSG-equipped car's better official fuel consumption figures and lower CO2 rating, and the auto starts to look like a must-have option. DSG, the Volkswagen Group’s Direct Shift Gearbox, made its debut in the previous generation R32 in 2002, and has since been adopted elsewhere in both the Audi and Volkswagen ranges. Effectively it's two manual gearboxes put together, one providing 'odd' gears (and reverse) and the other providing 'even' gears. The input shafts of the two geartrains are concentric, the 'odds' shaft running inside the hollow 'evens' shaft. Automatically-controlled wet clutches determine which shaft is in use, and the unused one can independently pre-select a gear ready for the next gearchange.

Upshifts are lightning fast and all but imperceptible, and the system uses ABS sensor data to avoid gearshifts mid-corner. Downshifts, complete with a pre-programmed throttle blip, are more noticeable but still remarkably smooth. DSG's default D mode behaves just like a conventional automatic, while the S mode delays gearchanges until optimum revs to maximise performance. In addition the driver can move the shift lever left to select a Tiptronic sequential-shift mode, or gearchanges can be activated using paddles behind the steering wheel. According to Volkswagen it's a system which 'counters the arguments of automatic sceptics'.

In some ways it does, but what it doesn't do is live up to another Volkswagen claim - that it combines auto convenience with 'the driving qualities of a manual'. In the DSG-equipped R32 the gearbox is convinced it knows what you want better than you do: even in manual mode, if you floor the throttle it changes down to 'help' you. In the manual R32, I could attack a winding road in, say, third gear, lifting off or braking for a tight bend or where visibility was poor, and that pokey V6 would haul us out of the corner or away from the hazard smoothly and swiftly with the throttle wide open, but no need to change down.

On the same road the DSG-equipped car insisted on changing gear each time, even when I’d told it not to by selecting a gear manually. Even ambling along in auto mode the DSG transmission was far keener to change down and get the revs up than I was in the manual car. I suspect this trigger-happy gearchange strategy would mean the auto R32's overall fuel consumption would be greater than that of the manual car, whatever the official figures say, but our time with the R32s was too limited to tell.

Whichever gearbox you choose the R32 is a seriously fast machine from A to B, whether your route takes in motorways and A-roads or unknown, unclassified country lanes. Point its nose into a corner and the R32 responds keenly, only succumbing to mild understeer under serious provocation. The ride is suppler than on many a car of similar performance, and mid-corner bumps and surface changes are taken easily in the Golf's stride.

But there's a hint of body float over transverse ridges and hump-back bridges, as though the rebound damping isn't all it should be, and an enthusiastic driver would wish for more feedback from the over-servoed brakes or the electro-hydraulically assisted steering. Torque steer, though, is barely detectable.

It's easy to be impressed by the R32. The cars we saw looked supremely well built inside and out, and sounded fantastic from the outside (if less exciting from within). That multi-valve V6 has an appealingly smooth, linear delivery which provides rapid motoring without a lot of fuss and commotion. The chassis is for the most part supple and silky, grip is prodigious and traction is never in doubt. The interior is efficient and comfortable, even more so if you specify the hideously expensive optional leather Recaros.

But there are plenty of accomplished rivals out there - not least Audi's A3 quattro Sport, which is just £500 more. Hatchback opposition also includes BMW's more powerful but more expensive 130i M-Sport and the much cheaper Ford Focus ST, Vauxhall Astra VXR and RenaultSport Megane. Volkswagen is hoping to steal customers away from such delights as the Nissan 350Z and Mazda RX-8, and might also tempt the odd Impreza or Evo buyer to switch.

One thing is certain: the £25,000 decision just got harder.

First published at Pistonheads.com April 2006