In response to shrinking sales of large SUVs in most parts of the world, carmakers are prepping a new generation of compact soft-roaders aimed at both the affordable and premium sectors of the market. We’ve already seen Ford release the Kuga crossover and Toyota add the Urban Cruiser to its lineup, and soon Audi will enter the burgeoning market with a new Q-car positioned below the midsize Q5 SUV.

The new compact SUV will be called the Q3 and it will be produced at a VW Group plant in Martorell, Spain, as of 2011. Audi will spend more than €300 million in preparing the plant for the production of the Q3, which will have a capacity of up to 80,000 units yearly.

The Q3 is described as a coupe-like five-door SUV with seat positions, wheel size, and ground clearance characteristic of a typical SUV. Its styling will be heavily based on 2007’s Cross Coupe concept car and this rendering shows designers will likely stick with the lines of the original show car.

Both three-door and five-door variants are expected, and since it will almost certainly be based on the same PW35 platform as the Audi A3 hatch, it will likely share internals with it as well. Engines will include a 147kW 2.0L TFSI engine, a 171kW 3.0L turbodiesel V6 and a 210kW 3.6L FSI V6.

BMW is also working on a similarly-sized vehicle to be named the X1 and Land Rover is expected to launch its own version in the form the stylish LRX. Mercedes’ GLK is a bit larger, more in line with BMW’s X3, but all are close enough in size and specification to be considered competition for one another.