The XC40 is Volvo’s new compact SUV - and note the company calls it an SUV, not a crossover. With high ground clearance, four-wheel drive available across the range and ‘the proportions of an SUV’, this is less of a jacked-up hatchback and more of a scaled-down XC60. The new baby of the Volvo range is also the brand’s first entrant into this massively popular market sector and with its fashion-led design, aims straight at the heart of the territory the Range Rover Evoque has occupied so well.

It’s not just the Evoque that the XC40 has to compete against, though - the new Jaguar E-Pace is a strong contender, as are established models like the Audi Q2, BMW X1 and Lexus NX.

The XC40 sits upon a brand-new platform that will go on to underpin several future models of the Swedish firm’s range. Called CMA (Compact Modular Architecture), it will allow Volvo to offer the XC40 with not just traditional petrol and diesel engines, but hybrid and even pure electric powertrains. At launch, though, there are only combustion engines on offer. Occupying a market sector the firm hasn’t entered before, the XC40 is by definition all-new, though items have been borrowed from across Volvo’s range of 60 and 90 series cars.

We had the opportunity to sample the T5 petrol model, mated to an eight-speed automatic gearbox. The 2.0-litre four-cylinder engine is smooth and powerful, but is noisy when pressed. And during our test drive, we noticed that fuel consumption was also high. Volvo isn’t known for being the last word in driver involvement, and the same is true of the XC40. Instead, the driving dynamics have been tuned to match the relaxed nature of the plush interior. Ride comfort is excellent, even on the optional 19-inch wheels of our test car. Those large alloys do spoil the ride around town though, crashing over potholes or speed bumps — whether they’re worth the upgrade will depend on how you value looks.

The XC40 follows distinctive Volvo styling cues, and manages to look rugged and refined at the same time

Handling is a mixed bag, with the XC40 remaining composed in corners. Despite the cushioned ride, body roll is well controlled, especially with the tighter sports chassis of R-Design trim cars. However, even in this guise the XC40 is no sportscar. Curiously long pedal travel and a complete lack of feedback from the steering stymie any real involvement, and even adjustable driving modes add very little to the experience.

No compact SUV could reasonably be called a design triumph, but the XC40 is arguably one of the best of the bunch. Neat proportions give it a pleasingly rugged stance, and it’s chock-full of neat detailing inside and out, like the tiny Swedish flag adornment on the corner of the bonnet. Volvo’s bold corporate grille dominates the front, flanked by eye-catching ‘Thor’s Hammer’ LED daytime running lights. Standard LED headlights ensure even base-spec Momentum cars look premium. In keeping with the fashion-conscious buyers Volvo is hoping to attract, the XC40 is available with a wide array of paint colours including dual-tone combinations. Stylish alloy wheel designs stand out from the crowd too — but if you’d prefer to blend in, it’s possible to spec a solid colour and standard wheels. The car looks good either way.

Cabin features the familiar vertical AC vents and the portrait oriented centre screen

Step into an XC40 from a Range Rover Evoque and you’ll be floored. The Volvo’s interior is a genuinely lovely place to be, with great-quality materials and superbly comfortable seats even on base-spec cars. The centre console is arranged around Volvo’s nine-inch portrait-oriented touchscreen infotainment system. It’s slick and works well, though the huge number of settings on offer can be baffling at first. The company’s main goal for the XC40’s interior was to carve out storage spaces wherever possible — and it’s achieved it. Moving the starter button and drive mode selector from the centre console has allowed space for a deeper central cubby and even a removable waste bin, while relocating the door speakers to the dashboard has made way for truly massive door pockets. There’s even a superbly engineered ‘curry hook’, which folds down from the glovebox to keep your Tikka Masala safely hung up rather than slopping around on the floor.

The clever touches continue in the boot, with a multifunctional false floor that can hide the parcel shelf, hang up bags and keep shopping from rolling around all at the same time. The boot itself is decently large at 460 litres, while six-footers will be able to sit comfortably in the rear. Equipment levels are impressive. All cars come with LED headlights, navigation and a 12.3-inch digital dial display.

The current crop of Volvos have arguably the best cabins in premium vehicles, and the XC40 isn;t any different

R-Design adds leather and Nubuck upholstery, a sports chassis and racy alloy wheels, while Inscription switches aluminium dashboard inserts for wood, adds chrome around the window trim and adds a crystal to the gearknob.

Safety kit is also generous, with autonomous braking capable of detecting vehicles, pedestrians, cyclists, and even large animals. Spec the Intellisafe Assist pack and you’ll benefit from adaptive cruise control with Volvo’s brilliant Pilot Assist semi-autonomous driving system, which takes the sting out of motorway stints.

The XC40 is a breath of fresh air in a market sector that’s quickly becoming bloated. Its neat exterior and wonderful interior are sure to earn it admiring glances, and it’s every bit as impressive on the road as its main rivals. And the fact that it comes with generous standard equipment and class-leading safety features is great too.