For 2002, Audi upgraded power in the 1.8 Turbo engines to 163 PS (120 kW; 161 bhp) and 190 PS (140 kW; 187 bhp) the 190 PS variant designated by a red 'T' on the boot lid, with both available with quattro, and in the 2.5 TDI intermediate version to 163 PS (120 kW; 161 bhp). A 2.0 engine with Fuel Stratified Injection (FSI) was also available. A year later, Audi reintroduced the S4, now powered by a 344 PS (253 kW; 339 bhp) 4.2 L V8 engine, as well as an A4 Cabriolet convertible variant (Typ 8H), finally replacing the 80-based Audi Cabriolet which had been discontinued in 1998. It included an electro-hydraulic operated roof, which lowered in under 30 seconds, and incorporated some styling changes which eventually found their way to the saloon version (such as body-coloured lower bumper and sill panels).
Audi introduced a revised A4 in late 2004, with the internal designation of B7. However, this new range A4 still utilised the existing Volkswagen B6 (PL46) platform, a chassis derived from the outgoing B6, but enjoyed heavily revised steering settings, suspension geometry, new internal combustion engine ranges, navigation systems and chassis electronics (including a new advanced Bosch ESP 8.0 Electronic Stability Programme (ESP) system). The front grille assembly has changed to be a tall trapezoidal shape in the same manner as the C6 (third-generation) Audi A6.
Audi's internal platform nomenclature uses PL46 (passenger car longitudinal platform, size 4, generation 6) for both B6 and B7 chassis. The Typ 8E and Typ 8H internal designations are also carried over from the B6 A4 range, but now have an additional identifying suffix 8EC for the saloon, 8ED for the Avant, and 8HE for the Cabriolet.
The engine lineup received many additions. The 2005 introduction of Fuel Stratified Injection (FSI) on the 2.0 TFSI and 3.2 V6 FSI petrol/gasoline engines, as well as other refinements, increased power output to 200 PS (147 kW; 197 bhp) and 255 PS (188 kW; 252 bhp), respectively. These engines both implement a four-valve per cylinder design. The prior 5-valve design was incompatible with the FSI direct injection system (due to the siting of the fuel injector, now discharging directly into the combustion chamber). The 2.0 Turbocharged Direct Injection (TDI) diesel engine now combines Pumpe Düse (Unit Injector) (PD) technology with 16 valves for the first time, while the larger 2.5 TDI V6 diesel was superseded by a 3.0 V6 TDI, offering a 204 PS (150 kW; 201 bhp) model during the year 2005 which was upgraded to a 233 PS (171 kW; 230 bhp) model in 2006. A 2.7 V6 TDI was added later.
Torsen T-2 based quattro permanent four-wheel drive remained available on most A4 models. Audi retired its 5-speed manual transmissions in favour of a new Getrag 6-speed. As before, multitronic continuously variable transmission (CVT), now with selectable 'seven-speeds', is available on front-wheel drive models, whilst a conventional ZF 6HP 6-speed tiptronic automatic transmission is available on the quattro four-wheel drive models.
In addition to the higher-performance Audi S4, which carried over the powertrain from the B6 S4 Audi has reintroduced the ultra-high performance quattro GmbH developed Audi RS4 (RS for RennSport) to the lineup, for the first time on the saloon/sedan and Cabriolet