Volvo V40 hatchback

£20,255 - £32,015

The Volvo V40 sits in an area of the market that's never been more highly contested than it is now. Family cars from premium brands such as the Audi A3, BMW 1 Series and Mercedes A-Class face a strong fight from more mainstream models like the Vauxhall Astra and Mazda 3 as they move increasingly upmarket. It's a busy battlefield, but one the Volvo still stands out from.

Though looks are subjective, its design has always been rather more individual than certain rivals and its appeal is stronger than ever now, having been tweaked for 2016. Taking cues from more expensive Volvo models, the V40 has been restyled with distinctive ‘Thor's Hammer’ headlights that first appeared on the XC90 SUV. With a larger Volvo badge than before and better concealment of the radar sensor, the V40 now has a far stronger visual identity.

The differences around the back are rather harder to see and are limited to very minor detail tweaks. There wasn’t much wrong with it, anyway – the attractive smoked glass tailgate and elevated tail light clusters have been retained. All models have dual exhausts, which means there's little visual separation between the lowest and highest specifications.

The distinctive design continues inside, although the once-innovative dashboard layout with its central concentration of small buttons is beginning to show its age, both aesthetically and ergonomically. It's all of undoubtedly high quality, though, if not quite surpassing the benchmark set by the Audi A3. All V40 models make smooth and quiet motorway cruisers and there's a fair degree of luxury in here, too. The seats are comfortable, offering great support, and a there's a reasonable amount of room for rear-seat passengers, although the middle spot is a little cramped. The V40's boot could be bigger: its 335 litres of luggage space is less than what you get in either the Mercedes A-Class, Audi A3 or BMW 1 Series – and frankly none of those cars are serious load-carriers in the first place.

The V40 might also surprise you when the roads begin to get a little more challenging – it's not at all out of its depth when asked to corner with vigour – which is partly down to underpinnings shared with the Ford Focus, which is one of the most praised hatchbacks to drive today. There's even a raised-up four-wheel-drive version, the V40 Cross Country, which we’ve reviewed separately.

The Volvo V40 is offered with a broad choice of engines. Petrols come in 120 and 148bhp T2 and T3 variants, both of which are, confusingly, 1.5-litre engines with the eight-speed automatic gearbox and 2.0-litres if you choose a manual. There's also a top-of-the-range 242bhp turbocharged 2.0-litre T5 engine, which only comes as an automatic.

The T2 and T3 both manage 51.4mpg and the T5 does 47.9mpg, with reasonable CO2 emissions bringing annual road-tax bills of £110 or £130 respectively. Not even the least powerful version is horribly sluggish: the T2 achieves 0-62mph in 9.8 seconds, while the rapid T5 takes just 6.4. However, as the T5 costs £10,000 more than the T2, it's best treated as a performance-orientated model on its own right.

You're in luck if you’re after a diesel, as we reckon the V40's diesel engines are more compelling. Most economical, and cheapest, is the 118bhp 2.0-litre D2, which can achieve 78.5mpg. The 148bhp D3 and 187bhp D4 are the same size and both achieve the same 74.3mpg economy figure. All three diesels have CO2 emissions low enough to render them road- tax-exempt – unless you choose the optional eight-speed automatic gearbox, but even that’ll only cost you an insignificant £20 a year.

Even the most economical D2 offers reasonable performance, taking 10.5 seconds to cover the 0-62mph dash. The D3 is only about £1,200 more to buy and reduces that acceleration figure to 8.4 seconds, while a further £1,400 gets you the even faster D4. The fact that all this performance is available without sacrificing much in the way of economy makes the D4 easy to recommend. However, the D3 seems a sensible and cost-effective compromise.

The V40 can be chosen in one of four trim levels, giving you the choice of a sporty or luxurious image. The range begins with the Momentum, which includes 16-inch alloy wheels, Bluetooth phone connectivity, DAB radio, air-conditioning and LED headlights. Another £2,000 upgrades you to the sporty R-Design, which has a part-leather interior and replaces the ordinary dashboard instruments with an eight-inch TFT digital display. Larger 17-inch alloy wheels add external flair.

Extra luxury is brought by Inscription trim, which costs around £800 extra but boasts a leather interior, cruise control and sat nav. Top of the range is the R-Design Pro trim with 18-inch alloy wheels, ambient interior lighting and rear parking sensors, as well as the leather seats and sat nav of the Inscription. We feel the Inscription or the regular R-Design offer the best value for money depending on whether you’re after luxury or sportiness. There are also a number of option packs available to customise your V40 further.

Polestar is a name that performance Volvo enthusiasts are becoming familiar with and the wholly owned sub-brand offers extras for the V40 that can be fitted by your Volvo dealer, including engine power boots and suspension and exhaust upgrades, as well as special alloy wheels. Packages are available, or individual upgrades can be ordered.

The V40 wholeheartedly deserves its reputation for safety. It was rated by Euro NCAP as the safest small family car you could buy when tested in 2012, scoring a near-perfect 98% overall and a five-star rating. Since then it has only been beaten by another Volvo, the XC90 SUV. The V40 was also rated 100% for its safety assistance systems – all models have an autonomous emergency braking system that applies the brakes if an impending collision is detected. There's also an airbag concealed under the bonnet for the benefit of errant pedestrians. We gave it our Carbuyer Safest Car award in 2015.

The V40's reputation for reliability is less gold-plated, but doesn’t raise particular concern. It finished mid-way through the ratings of our 2016 Driver Power customer satisfaction survey, coming 78th out of 150 cars overall, but a 43rd-place finish specifically for reliability was more impressive.

If you’re after a comfortable and luxurious car, but find the offerings from the German manufacturers a little conventional for your tastes, the V40 makes an excellent case for itself.