Volvo is gunning for premium hatchbacks such as the BMW 1-series and Audi A3 with a new upmarket S40 that goes on sale in March.
Under the new skin is Volvo's version of the next-generation Ford Focus/Mazda 3 platform. That means independent control-blade rear suspension and the promise of ride and handling far exceeding the Mitsubishi-derived set-up of the current car.
The new platform seats driver and passengers in an upright position in both front and rear cabins, maximising interior space and differentiating the cabin from the low-slung S60.
Volvo will launch the S40 with top-of-the range five-cylinder engines, including a flagship T5 model powered by a 220bhp soft-turbo 2.4-litre five-pot and a 170bhp 2.4-litre naturally aspirated five.
Bigger-selling four-cylinder petrol and diesel engines will cascade through the range next year. First is likely to be a Mondeo-derived 118bhp 1.8-litre petrol. But the diesels - a 107bhp 1.6 and 134bhp 2.0 - aren't expected until late 2004. The entry-level 100bhp 1.6 is likely to be held back until early 2005.
An estate version of the S40 - to be badged V50- is expected on sale late next year after launching at the Geneva Motor Show next spring. Following that is a replacement for the C70, badged C50 coupe and cabriolet.
Volvo insiders say prices are likely to remain largely unchanged from today's S40 with the range-topping T5 at around £22,000 and the entry-level 1.6 at around £15,000.