In August 2006, Audi introduced the second generation S3. Offered in three- and five-door body styles, the second generation—Typ 8P—S3 is powered by a modified and uprated Volkswagen Group-sourced 2.0-litre turbocharged FSI petrol engine, with a maximum output of 195 kW (265 PS; 261 bhp). As with all Audi S models, the design was done in-house by quattro GmbH. The engine features uprated high-performance pistons, revised boost/fuel mapping, increased turbocharger size (KKK K04) and larger intercooler. The most powerful form of this engine, and quattro four-wheel drive, makes for a 0–100 km/h (0–62 mph) time of 5.5 seconds, and an electronically limited top speed of 250 km/h (155 mph). Audi offers both six-speed manual and six-speed S-Tronic automatic transmissions with the S3.

The spring ratings and dampers were revised, along with the body kit. Like its predecessor, although badged a "Quattro" model, the S3 does not employ a Torsen centre differential (as in other common Quattro models), but instead uses the Swedish Haldex Traction system in its on-demand four-wheel drive transmission, due to the transverse engine layout.

2008 facelift
Audi introduced a number of changes to the A3 and S3 in 2008. These include revised nose and tail styling,...