Both five-cylinder engines and four-wheel drive will be available when Volvo’s entry-level model goes on sale after its premiere at the Frankfurt motor show in September.

Based on a shared Ford platform that will also underpin a new Focus, the new S40 replaces a model developed and built in conjunction with Mitsubishi and launched in 1995.

Volvo said it is particularly important that its new entry-level model should appeal to young buyers.

The interior is claimed to be a revolution, with a slim free-floating centre console – the first of its kind in the automotive world – creating “an aura of exclusivity, simplicity and space”.

In the new frontal structure, four different grades of steel are used in a high-tech interplay to provide maximum safety for the car’s occupants.

The new S40 is being launched with a choice of five-cylinder engines with the 220 hp T5 model topping the range, as well as a four-cylinder turbodiesel with a power output of 136 hp.

The T5 can also be specified in an AWD version with a six-speed manual gearbox.

In 2004, the engine range will be supplemented with four-cylinder petrol engines.

Unlike its Nedcar, Holland-built predecessor, the new Volvo S40 will be built in the Volvo Cars factory in Ghent in Belgium, which has been remodelled and modernised at a cost of €340 million.

Production gets under way this autumn and, in 2003, the new S40 will be sold only in Sweden, with exports starting in early 2004.

The sales target for 2004 is 70,000 cars, of which 20,000 are earmarked for the USA, the expected largest single market.

The companion V50 sports wagon will reach showrooms in the first half of 2004.