There is just one engine choice: a 1.9-liter in-line four that uses light-pressure turbocharging to produce an impressive 160 horsepower at 5100 rpm. Volvo engineers have extensively revised this engine for 2001, adding continuously variable valve timing on the exhaust side, which lowers emissions and boosts torque from 170 to 177 pound-feet at 1800 rpm. But it is mostly the light-pressure turbo that delivers terrific high-end horsepower with workhorse low-end torque, a difficult combination to achieve otherwise. The S40 feels powerful; in fact its performance is on par with many V6-powered compacts.

No manual transmission is offered, but the high-torque turbo engine works very well with the automatic transmission; which has also been upgraded for 2001, from a four-speed to a five-speed. The extra gear improves acceleration slightly but the biggest gains are in fuel economy and noise reduction.

As you would expect from Volvo, safety equipment such as multi-stage front airbags, side-impact airbags, side-curtain airbags and four-wheel-disc brakes with ABS, are standard. Stand-alone options are few and include leather upholstery ($1200), power driver's seat ($450), and power sunroof ($1200). Volvo has instead packaged a wide variety of desirable equipment, including a traction control system called Dynamic Stability Assistance, heated seats, and headlamp washer/wipers, into an $850 Cold Weather Package. There's also a $550 Sports Package, with a spoiler and fog lights; as well as various audio and interior upgrade packages.

Several dealer-installed accessories, such as a dog guard and cargo mats, are also available.