Amidst the reams of press releases we wade through every week promising the next big thing, it's rare to come across much that is in any meaningful way groundbreaking. Yes, there are 'new' cars but they usually plough a well used furrow in conventional genres. Volvo's S40, featured here in 2.4-litre petrol form, claims to take a different tack. It gamely attacks a section of the market that has been proved time and again to be a dead end, namely that of the 'Premium Compact Saloon'.

But what on earth is that? Well basically, a car for someone who'd like something nicer than a medium range Mondeo or Vectra-style model but can't quite stretch to a 'Compact Executive Saloon' like a BMW 3 Series, an Audi A4 or, yes, Volvo's own S60. Or perhaps they could stretch to one of these but only aspire to the cheapest, slowest, most poorly equipped version. This 2.4-litre S40 is firmly aimed at those in the latter category for, at less than the price of a comparatively anaemic 129bhp Audi A4 2.0, you get 170bhp, a prestige badge, hi-tech engineering, plenty of equipment and all the quality you could want.

Cynics will point out that Volvo's old S40 campaigned on the 'Premium Compact Saloon' card for years without much success, but then that car never had an engine like this in its armoury - or the high-tech design and engineering to go with it. One of the best things you can say about this car is that it takes many of the features that have made the larger S60 so successful and shrinks them into a handy sized package.

The 170bhp 2.4-litre model is available two versions. There's SE priced at £19,495 or the plush SE Lux for £20,995. The engine is available with Volvo's Geartronic automatic gearbox at no extra cost. All models are well equipped, the SE version adding 17-inch alloy wheels, rain sensing wipers, a trip computer and body-coloured side mouldings along with a host of other refinements to the basic spec. As we've already suggested, these prices elevate the car into direct comparison with 'proper' Compact Executive fare like the lowlier BMW 3 Series and Mercedes C-Class models - cars with less in the way of engine and equipment but a whole lot more clout when it comes to car key kudos. Can a Volvo running on what is essentially a modified Ford Focus chassis really better a Mercedes or BMW? It has to be said that the Swedes have their work cut out.

As we've touched upon, the S40 2.4i's 170bhp engine is a good deal more powerful than you'd find for the same money with a more prestigious badge and it's enough to accelerate the Volvo to 60mph in eight seconds and on to a top speed of 137mph. The 'big engine in a small car' package also means that fuel economy isn't bad either, the S40 managing a reasonable 33.4mpg. The trouble is, this sandwiches the S40 between the prime movers in the compact executive division and more powerful offerings with humbler badges such as the 150bhp SEAT Toledo 2.0FSi Sport or its Volkswagen sibling, the Jetta 2.0FSI. The SE version of the S40 2.4i even impinges on the territory of cars like Saab's 9-3 and the Jaguar X-TYPE.

"Big engine in small car is a formula that rarely fails to entertain"

Still, bear with us. Volvo has made some small incremental improvements to the car's look and feel. At the front end, the chrome-framed 'egg-crate' grille has been reprofiled and features a bigger Volvo badge. Clear lensed headlights and a wider air intake look a little more distinctive, while at the back there's a revised LED tail light assembly as well as a modified bumper, boot handle and tail pipe design.

All too often, we hear about innovations in car design and what we really get is moderately incremental changes. The S40 features a number of styling touches which we've genuinely never seen before. The exterior won't get too many pulses racing, effectively resembling a shrunken S60, but the cabin is a delight. Volvo interiors are traditionally odd things. Although they work supremely well, they are often clunkily designed with scant regard for the sort of slickness that separates them from rivals. Little of the design flair we usually associate with the Scandinavians has traditionally seemed to translate into their cars. The 'spaceball' gear selector in the S60 showed that Volvo could come up with some neat ideas and the S40 takes the spaceball and runs with it. The key design feature is a centre console that's a softly contoured moulding featuring supremely easy to use controls and fresh air behind it. You can specify wood, aluminium, plastic or semi-transparent plastic finishes and everybody who gets in will notice it. This is probably the neatest interior design feature we've come across since the original Audi TT was launched. Like the TT's cabin, the S40's feels like it belongs on a motor show stand. This time around, the controls have been altered while the centre tunnel storage area features a smaller handbrake and a revised armrest for better driver comfort.

The S40 rides on the same basic chassis set up as the Ford Focus, the Mazda3 and Volvo's V50 estate. That's not to say the S40 is simply a rebodied Focus. Although the underbody, subframes and suspension layouts are the same on all these models, there's vast scope for tuning of individual aspects so all will drive differently.

Volvo haven't skimped when it comes to safety and they claim that the S40 is as good to crash in as the flagship S80 saloon. Making a small car as safe as a big 'un takes some doing and it's only when you look at some of the finer points of how Volvo have achieved this that you realise quite what this commitment means. It involves casting the turbo housing as one with the exhaust manifold so that the engine is more compact when mounted transversely, giving more space for crush zones. It means developing the Intelligent Driver Information System which monitors how hard you're using the throttle, brakes and steering and will hold incoming telephone calls or satellite navigation instructions until things have calmed down so as not to distract you in the middle of a manoeuvre. It means using four different grades of high tensile steel for crash protection. Would the S40 look a little sexier with BMW-style flame-surfaced concave flanks? Probably. But side impact protection involves having as much deformation space as possible which is why it's slab-sided to keep its occupants looking good.

The 2.4-litre fuel injected engine of the S40 will be enough for most but if you really hanker after jet-heeled performance, there's a 220bhp T5 variant that retails from £21,845 in R-Design Sport guise or a D5 performance diesel. The T5 will notch off the sprint to 60mph in just 6.5 seconds and run on to 150mph. This would seem to promise great things if Volvo ever created an S40R, although recent experience with the underwhelming S60R tempers the enthusiasm a little. Fast Volvos rarely hit the mark and after sampling the 2.4-litre model, there seems little to modify that opinion. The 2.4-litre version is a little slower than the 2.5-litre T5 but feels a good deal more composed in the way it accesses the far margins of its performance envelope. With taller tyres, the Geartronic gearbox and less torque steer to contend with, the 170bhp car feels a good deal more composed and unruffled than its slingshot sibling.

The Volvo S40 2.4i is a very interesting proposition and represents the pick of the petrol-engined models in this fledgling range. Although it's a vastly more assured car than its predecessor, it's difficult to see it remaining anything other than a rather specialised taste. However, if quality matters rather than quantity, the S40 2.4i could just boot its rivals into touch.