When the new FIA Group B rule set was introduced in 1982, manufacturers chose a variety of different paths to leverage the new regulations.
Audi's path was slightly different from those at the front of the pack - Lancia and Peugeot. Most factories produced race versions of their cars that were not just modified from the homologation versions offered to the public, but were barely common in any way. That's where Audi was a little different. It kept with a philosophy of building it's rally cars on very similar principles to its road going equivalents.
When the S1 variant of the Audi Sport Quattro was introduced for the 1984 season, it was much the same basic configuration of the street-going version, with the engine in a position very forward of the front axle line. The Sport Quattro was Audi’s first real Group B car. While the basic layout was retained, the chassis was much different compared to the original. Over 12 inches had been chopped out of the car between the door and rear wheel. The cooling system and alternator were relocated to the rear of the car to improve weight distribution. And of course the new version came with all the latest aerodynamic developments and other features learned from the former rally Quattro.
The 1984 season was Audi’s most successful year in rallying. Stig Blomqvist’s sliding style combined with the short-wheelbase, more powerful (450+ hp) and more advanced (six-speed transmission, kevlar bodied) Sport Quattro combined to take both titles for the 1984 season. Their success notwithstanding, the 1984 season showed the strength of the developments by Peugeot. They launched their brand new 205 T16 in Corsica for the 1984 Tour de Corse rally. The new 205 differed from the Quattro in several key areas - it was rear-engined, utilized a space frame, and it was a fundamentally smaller car, with less weight. Peugeot driver Ari Vatanen nearly won the 205’s first rally, but a crash ended his rally early.
The Peugeot performance concerned the Audi team managers enough to tell the engineers in Ingolstadt to get to work for 1985. And they did. The new-for-1985 car featured a new fire-breathing 2.1 liter 20 valve five cylinder engine which produced somewhere in the range of 550 hp at 8,000 rpm. There was even some testing done of a semi-automatic transmission that ultimately was the basis for the PDK gearbox.
With a weight of around 2300 pounds, in conjunction with the incredible traction and power, the S1E2 (Second Evolution) could accelerate from 0 to 60 in 3.0 seconds. The brakes had a unique water spray system to keep them cool. The car was a monster.
Despite the new power, and the successes of the previous year, interestingly, the Audi Sport Quattro S1E2 did not actually see a lot of racing success. It's only victory in FIA Group B Rally came with Walter Röhrl's win in San Remo in 1985.
Of course the following year, Group B racing was discontinued.
The Quattro in its varying forms competed for four and a half years, winning four championships, and changing the face of rallying forever. While Audi has since found great success in other venues, including Le Mans prototypes, it was this car - the Sport Quattro S1 - that was the cornerstone of their motorsports image for decades.