SECTOR Small Hatch  PRICE £19,745 – £26,795  FUEL 51.4 – 78.5mpg  CO2 94 – 136g/km

It’s all getting very interesting in the premium hatch class. Just as Audi and Mercedes launch new models to take on the BMW 1 Series, Volvo now enters the fray with its all-new V40.

The V40 replaces the Ford Focus-based S40 saloon and V50 estate with a single five-door hatch model. In time, it will also be the car to take over the mantle of smallest car in the Volvo range when the C30 is discontinued in 2013 and not directly replaced.

So the V40 has a lot riding on it. To answer this, Volvo has come up with a cabin that is classy even by its high standards. All of the materials are satisfyingly tactile and the trademark ”floating” centre console is present and correct.

Volvo has introduced digital instruments with the V40, which the driver can reconfigure to his or her preferences as a £350 option. It’s a neat touch, but one we soon found we left alone. Much more to our liking is the wonderful driving position that lets any driver get comfortable for a full day at the wheel. Driver vision over the left shoulder for changing lane or parking isn’t great, but it’s no worse than most cars in this class.

Driver and passenger space is excellent, on par with its best rivals, but the optional panoramic sunroof pinches headroom so taller drivers may be wise to avoid putting a tick in this box.

Curiously for a Volvo the boot of the V40 is not especially large, though it makes up for this to a large extent with the £100 optional cleverness of the folding floor. This lets you divide the boot into sections and helps create a flat load floor when desired.

Volvo is sticking with its usual ES, SE, and SE Lux trims, with satellite navigation standard on all models. Climate control, electric windows all round, a Bluetooth connection and alloy wheels are also standard-fit. 

The SE trim is set to be the most popular with company buyers, and adds cruise control, keyless start and steering wheel controls for the stereo. All V40s come with Volvo’s City Safety system and the world’s first pedestrian airbag which deploys across and around the windscreen.

A pair of 1.6-litre petrol engines come in 148bhp T3 spec or 178bhp for the T4. Diesels are the more compelling units, however, with a choice of 1.6-litre 113bhp D2 and five-cylinder D3 and D4 motors with 148 and 175bhp respectively.

While the more potent diesels have their appeal, it’s the D2 that is the pick of the bunch and not just for its fiscal sense. Where the more powerful engines don’t quite deliver the keenness their brawn would suggest, the D2 is eager and quiet, offering performance similar to the DRIVe to be just the right side of adequate for everyday driving.

Fitted with a six-speed manual gearbox and the smaller 16-inch alloy wheels of the ES model, the D2 also returns an impressive 78.5mpg average economy and 94g/km carbon dioxide emissions. Go for the more opulent SE with its 17-inch wheels and wider tyres and you’ll still see 74.3mpg and 99g/km emissions to benefit from the lowest tax brackets possible.

On either size of the wheel, the V40’s ride is firm, while it’s positively harsh on the largest 18-inch alloys with sports suspension. The D2 on normal suspension is a much more relaxed drive with handling that is nimble but not as agile as a 1 Series. In every other respect, the V40’s drive is a distilled version of the V60’s to be comfortable, capable and composed without ever shining in any one area.

Verdict

Low running costs are not enough to set the Volvo V40 apart from its competitors, but its high quality, feel-good interior gives it an appeal missing in its German rivals. The smaller diesel is the best bet for company car users, but by happy coincidence is also the most enjoyable to drive.