Suzuki sold just 1429 Liana sedans and hatches last year, a drop of 36.1 per cent compared with 2005.
While the $19,990 Liana is priced at the bottom end of the small-car market, the SX4 will be aimed more upmarket.
Suzuki refused to release a recommended retail price for the car. The maker has, instead, launched the SX4 with an introductory offer that will last for "a few months".
The five-speed manual will start from $24,390, while the four-speed auto will cost $26,390, placing it in direct competition with the Impreza hatch, which starts from $24,440.
Suzuki's new model spells the end of Subaru's monopoly on all-wheel-drive technology in the small-car class.
The Impreza is the only volume-selling all-wheel-drive small-car on sale and Subaru has been able to justify a price premium for it based on the perceived safety and handling benefits of all-wheel-drive.
Suzuki's SX4 is powered by a 2.0-litre, four-cylinder engine that produces 107kW of power and 184Nm of torque.
Unlike the Impreza, the SX4 can be driven in front-wheel-drive or all-wheel-drive modes. In front-wheel-drive it is more fuel efficient.
In all-wheel-drive automatic mode the system increases or decreases the amount of torque going through the front wheels for maximum traction. The system also has an all-wheel-drive lock mode that provides torque to the rear wheels for start up in low traction conditions such as mud or snow. It then operates in automatic mode at speeds of more than 60kmh.
Standard safety equipment includes front, side and curtain airbags, as well as anti-lock brakes. The SX4 has a four-star NCAP crash-rating for occupant protection.
Equipment includes climate-control air-conditioning, audio controls on the steering wheel, cruise control, power windows and mirrors, 16-inch alloy wheels, a CD player, roof rails, fog lights and a rear spoiler.
The SX4 has a keyless start function (similar to luxury models from Lexus and Audi) that allows the car to be started at the push of a button as long as the key is in the cabin. The system also allows the doors to be locked or unlocked by touching the door handle (as long as the key is within a certain range) and removes the need to fumble around for the key when you have your arms full.
As Subaru has done with the Impreza, Suzuki is using the SX4 as the foundation for its new World Rally Championship car which will contest selected rounds of this year's championship.
Suzuki plans to more than double Australian sales by 2010. It is looking at a small city-car and a medium-sized car.
Sales last year were up 14.5 per cent, buoyed by the success of the Swift city-car and the Grand Vitara off-roader.
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