I had a 2018 S4 for two years, really liked it, but never felt excited to jump in and go for a drive. It was enjoyable on long trips, great space, the interior is beautiful, but it was numb and nothing about it was visceral. The Dynamic steering didn't help, so drive both a standard steering and dynamic rack if you can. I traded it in for a 2018 RS3 last year.
Quick take: If you're going to tune or tweak, RS3 all day. If you want the better daily driver, S4 is a no-brainer.
Some additional thoughts:
Brakes: Great in both cars, I have the carbon ceramic brakes on the RS3 and with a car that weighs a bit over 3,540lbs, the brakes stop time. They'll be soul crushing to replace at some point, but they are scary powerful on the street. S4 brakes are really strong and have good modulation as well.
Steering: Edge goes to the RS3, but I've driven few non-dynamic steering S4s, so this might be personal preference, given my two cars.
Ride: I had the S Sport Package on the S4, so dynamic chassis and adaptive damping. It rides well, is compliant in comfort and firm and sporty in dynamic. Never had any complaints. I have the Dynamic Plus Package on the RS3 - fixed suspension, CCB brakes, higher top speed, etc. Not really a fair comparison. I also never drove an RS3 with adaptive damping, so can't speak to how it is, I know it was trash in the S3 in early iterations. I’m now on coilovers, which was my plan and why I wanted a fixed suspension car, so apples to oranges on this one.
AWD: Quattro forever. Haldex gets the job done, but it's the worse option for anything other than drag racing, which I don't care about.
Engine/Transmission: The RS3's motor is special, the sound alone is intoxicating. If you like power to redline, the RS3 delivers, torque is there from 2K and power doesn't die until 7K. The combination of multiport injection and direct injection is what gives the engine such high power potential. You buy an RS3 for the engine and transmission. The ZF8 in the S4 is great, but comparing it to the DQ500 isn't fair. The DSG is a masterpiece, can handle huge power and is far more engaging than the torque converter.
Interior: S4 is premium, luxurious and a comfortable place to spend time. The RS3 is bare bones, other than the same exact digital dash (with added RS features), if you option for the virtual cockpit. In defense of the RS3, all of the touch points, steering wheel, gear shifter, MMI knobs, they all feel solid and on par with the S4’s controls.
Exterior: Push, to each their own. My S4 was nice, loved the Florett Silver, but the RS3 looks better to me. It's tarted up, on coilovers and wheels, but I do catch myself turning around in parking lots to look at it.
Enjoyment: I have zero regrets about moving down in comfort, refinement and convenience from the S4. I decided after having it for two years it was a great car, but too clinical. It did everything well, but never left me excited to drive it. It's the clear choice for A to B needs. On the other hand, I love the RS3. I wake up early to take drives with the sunroof cracked to listen to the exhaust, the sound is raucous, it's fun, it's sophomoric. The car pops and bangs on warm start ups, it scares children at gas stations, it's a sleeper and it's the most unique production engine being made today. The car is edgier, feels more connected and is great for weekend driving. With that being said, I have no kids, my wife has an X3 for road trips and grocery runs, and the rear visibility is so poor in the RS3 I removed the rear headrests. I never have passengers in the back seats and now couldn't in good conscious. So, not at all practical for most.
Final Verdict: Drive both. See what you prefer. You can 100% daily drive an RS3, but it would be less enjoyable than the S4. If you care about tuning and making the car your own, the RS3 is the primary focus of the aftermarket at this time. It's a low volume rocket. To compete with the beautiful wagon above, here’s my RS3.
Good luck.
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