The Audi TT, at last, has some serious competition.

OK, so the Peugeot RCZ has been around for a little while but it’s only now that the R version is here that the affordable two-seater from Germany has to look over its shoulder.

Affordable? Well, the RCZ can claim to be a sensible option at just over £22,000, while the Audi TT costs from £24,630.

But in truth most TTs sold are of the better equipped and more powerful versions. In fact the RS Plus quattro model costs just under fifty grand.

But Peugeot’s RCZ, which is a stunning looker, now comes as a high performance car too.

The RCZ R costs just under £32,000 and comes with a fabulous engine which zips the car to 60mph in 5.9 seconds and on to 155mph.

In fact it is the fastest and most powerful production car the firm has ever built. It has genuine racing DNA. After all, it was created and engineered by the same people who built incredible Le Mans racers and terrain-munching rally cars.

The R’s extra muscles bulge out from every angle when you compare it to the standard RCZ, which itself is pretty much full-on.

A model-specific touch is the aggressive new two-tone alloy wheel design, which looks a nightmare to clean but is drop-dead gorgeous. ‘R’ detailing ices the cake.

Under the bonnet is what you might think is the same turbocharged 1.6-litre engine that the lesser RCZ uses, and while you’d be half-right a lot has changed. A bigger turbo and new engine tuning create more power, while lightened and strengthened internals make sure the R will last the test of time – and mileage.

Acceleration is commendable.

Careful turbocharger tuning gives the RCZ R huge pulling power from just under 2,000rpm, and while turbo lag is inevitable it’s minimal if you hit the power after 3,000rpm. Too hot to handle?

The same wide tyres that can struggle so hard to transfer the mammoth power output to the road provide stunning cornering grip. The R stays flat and poised from entry to exit, and a Torsen locking front differential helps it to pull itself out of corners with indecent gusto.

You also get a delicious amount of steering feedback thanks to the differential. The net result is a much more tangible connection to the road than you normally get.

As you’d expect, the ride is firm, but it’s rarely crashy or uncomfortable. Peugeot Sport has tuned the dampers to keep the wheels in firm and confident contact with the road, and it works. The price is right. At a fiver short of £32,000 the R’s list price is eye-opening. The five-seater Audi S3 and BMW M135i are more powerful and cheaper, although its most direct rival is the £4,000-pricier Audi TTS.

It’s still not cheap, but climbing into the cabin there’s lots of luxury. The seats hug your body closely, and it’s only when you leave the car that you realise how comfy they really are. Copious amounts of black leather with mouth-watering red stitching litters the interior, and there’s very little within reach that doesn’t feel premium.

The only real bugbear in terms of ergonomics is that the centre console is out of reach. You have to stretch away from the seat back to operate the controls, which can be distracting.

Real car enthusiasts might also wish the R made a more characterful noise. The performance is there, the quality is beyond doubt and the looks are so striking you might end up with bruises.

But it’s a practical car, too. The boot is huge; big enough for most average families to take a week’s holiday away, although the rear seats are only for ‘occasional use’.

The R model has broken away from the more conservative RCZ and forged a much bolder path.

Peugeot RCZ R PRICE: £31,995 on the road. The RCZ starts at £22,095 ENGINE: A 1.6-litre turbocharged four-cylinder producing 270bhp via six-speed manual gearbox driving the front wheels PERFORMANCE: Top speed 155mph, 0-62mph in 5.9 seconds COSTS: 44.8mpg EMISSIONS: 145g/km WARRANTY: Three years’ unlimited mileage cover