Volvo V40

The V40 and 1 Series were so closely matched that it feels unfair to place the Volvo second. It’s stylish, well built and good to drive, while the cabin is one of the best in the business. If it had just a little more dynamic sparkle and slightly lower running costs, it would have triumphed.

Make no mistake: the new V40 is far more than just the latest addition to the Volvo range. The manufacturer hasn’t had a contender in the family hatchback class since the nineties’ 440, which was developed in collaboration with Renault.

The new model shares underpinnings with the latest Ford Focus, but has set its sights on premium-badged big hitters from the likes of BMW and Audi.

They should be worried, too, as unlike the conservative 1 Series and forthcoming A3, the V40 scores on style. Even our mid-spec SE had smart chrome trim around the grille and curved window line, plus its 16-inch alloys are standard.

Volvo was never renowned for its design prowess in the past, but the V40 has managed to incorporate all the best styling elements from across the current range. The sculpted front end features neat projector-style headlights and a contoured bonnet that echo the S60 saloon, while the curvy tail-lamps and half-glass bootlid are straight from the C30 hatchback. The Volvo is also the longest and widest car here, which enhances its purposeful stance.

Climb inside and the styling verve continues, with details like a classy frameless rear-view mirror and optional TFT display (£350) catching the eye. The digital dials use the same tech as those in the Lamborghini Aventador and allow owners to choose from three driving themes: Eco, Elegance and Performance. Each gets it own colours and layout, and the set-up is well worth the extra outlay.

The rest of the cabin feels reassuringly well built, too, with plenty of soft-touch materials across the dash and a button-heavy floating centre console. There’s also high-quality leather trim on the steering wheel, while the shift pattern on top of the gearlever is backlit, adding an extra touch of class at night.

The V40’s interior feels bright and airy compared to the cabins of the Golf and 1 Series, and despite the striking design, visibility is good. Yet the comfortable and supportive light fabric seats will probably mark easily over time, and the high clutch pedal means finding the right driving position isn’t as easy as in the BMW.

Standard kit is impressive: Bluetooth, cruise control and keyless start are all included. Every V40 also has two class-leading safety features. City Safety is a laser system that can sense an imminent collision and automatically brake the car to prevent a low-speed accident. And if you do end up hitting someone, then a U-shaped pedestrian airbag triggered by sensors in the bumper pops out from under the bonnet to soften the impact.

All this technology partly explains the Volvo’s higher price – but the lack of practicality may come as a surprise to the brand’s traditional customers.

Headroom in the rear seats is tight for anyone approaching six feet tall, and the high, narrow boot holds only 335 litres with the rear seats in place. In contrast, the Golf fits five adults in comfort and offers 15 litres more boot space.

However, many buyers will be willing to sacrifice luggage room in return for the V40’s engaging driving experience and low running costs. The efficient D2 model showed no lack of straight-line speed during our track tests, plus it was much quicker than both of its rivals in-gear – it beat the BMW by over a second when accelerating from 50-70mph in fifth, with time of 8.6 seconds. On the road, the gap isn’t as wide, but the V40 is more urgent when overtaking due to the fact it has 10Nm more torque, at 270Nm.

It uses the same chassis as the Ford Focus, but Volvo has improved the suspension and fitted a stronger steering column. This means a slightly firm ride, but body control is great, and the V40 handles tidily. The weighty steering is direct, if lacking feel, and the long-throw gearbox is accurate. The absence of wind and road noise, plus some of the most comfortable seats around, make it an excellent cruiser.

Combine these abilities with a tax-free 94g/km CO2 figure, plus on-test economy of 46.4mpg, and the V40 is a great company car option. But it’s the most expensive car here, and despite all its equipment, it has the weakest residuals – retaining only 40 per cent of its value after three years. Will these minor niggles spoil an otherwise outstanding test debut?