Mazda Australia says it has no interest in engaging in the country's intensifying sub-$20K small-car price war with its all-new Mazda 3 that's due to launch early next year.

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Competition in Australia's most popular new-car class is hotter than ever, with three of the segment's biggest names all offering base models for under $20,000 – the $18,990 Nissan Pulsar, the $19,490 Holden Cruze and the $19,990 Toyota Corolla.

Mazda Australia managing director Martin Benders denied the third-generation Mazda 3 would follow suit, however, confirming that the new model - officially unveiled overnight - would cost at least as much as the outgoing second-gen that starts at $20,330 before on-road costs.

“No [sub-$20K starting price], not for the new car at all,” Benders said. “You saw it today, it deserves better than that.”

“You have to ask yourself the question why [the competition has] priced it there, and they’ve done that because that’s where they think they need to be to sell the cars.

“My approach is that I’d rather be better in the segment than cheapest in the segment. We offer the better alternative in the segment. Still competitive, still in the mix, but it doesn’t have to be rock bottom, and I think this car fits that.

“We have to meet the market … and if the market tells me that it’s not the car they want then I’ve got to deal with it, but at this stage everything that we’ve done in research says that customers would like to buy that car.”

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Asked if he believed the new Mazda 3 was a class above the Pulsar and Corolla, Benders affirmed, “I do”, suggesting it was a closer rival for the Volkswagen Golf.

“Yeah, that … premium end of the non-premium segment,” he said. “A cut above what’s available in that segment.”

Benders said the new Mazda 3 has taken big strides towards the premium end of the market.

“You have to remember that second-gen really lived its life through the global financial crisis period and we did things then to take advantage of the market at that time.

“Now we’re looking at a market where there is a segment available to us that says, ‘Yes, we would like a nice car, and if you can offer it at a very good price then we’re ready to buy it’.

“I don’t think it would be a bad comparison if you lined it up against an [Audi] A3 or even a [Mercedes-Benz] A-Class or something like that. It stacks up, it looks the goods, and you know it’s going to be good quality and everything else, and we’re not going to be priced up where those cars are.”

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Benders said despite the upmarket shift, the price of the new range would remain largely on par with the outgoing generation.

“The competition won’t let us move too far from where we are at the moment,” he admitted.

“The other thing you’ve got to realise is where is the Australian dollar going to go. At the moment we’re not particularly concerned about it, but if you price yourself to a strong dollar and then the dollar moves, it’s very difficult to start moving your price up, so you’ve got to sort of play that game pretty carefully.”

Pricing of the current Mazda 3 ranges from $20,330 for the Neo manual to $33,670 for the SP25 automatic, with the Mazda 3 MPS hot-hatch topping the line-up at $39,490.

Read: 2014 Mazda 3 revealed.