At first glance the 2018 Volvo XC40, which arrives in the U.S. in May next year, bucks the conventional wisdom about how a modern Volvo should look. There's no studied elegance to the exterior surfaces, no calming Swedish zen to the interior ambience. Instead, there's a pugnacious swagger to the XC40 inside and out, with forms, materials, and colors that are reminders that not all Scandinavian designs are a riff on birch wood and mid-century furniture.

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And that's exactly what Volvo design chief Thomas Ingenlath intended. He says although the XC90 redefined Volvo for the 21st century, the XC40 provides an opportunity to further change the perception of Volvo and broaden the expression of the vehicles the company makes. "A family look doesn't necessarily mean they all look like each other," he says. The design language you see on the XC40 will be echoed on other small Volvos to be built on the new Compact Modular Architecture (CMA) underpinning this compact SUV.

The XC40's exterior is the work of young British designer Ian Kettle and is heavily based on a sketch he drew back in 2013, a year after he graduated from the Royal College of Art in London. So enamored with the sketch was Ingenlath the design went straight to a full-size clay for review, skipping the normal quarter-scale model phase of the design process. "It's exactly the car we wanted to do," he says.

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The XC40 is recognizably a Volvo, but it's distinctively different from the larger 90 and 60 vehicles. The grille has evolved, and the Thor's hammer daylight running lights given a racier look. The body side features crisp lines over the front and rear wheels and a deep concave section on the doors. At the rear is another variation of Volvo's long-standing tradition of extending the taillights up the trailing edge of the rear-most pillars.

Most controversial element of the XC40's sheetmetal is the way the greenhouse is pulled dramatically upward at the rear. On cars painted a single color, the C-pillar can look bulky, but the vast majority of XC40s are likely to be ordered with either the white or black painted roof that will be standard, respectively, on the entry-level Momentum and midlevel R-Sport models.

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Inside, the XC40 is a similar mix of the familiar and the new. Volvo's 12.3-inch TFT instrument panel—used in XC90 and XC60—will be standard across the XC40 range, as will the 9.0-inch infotainment screen in the center of the dash. The minor switchgear is also familiar fare, and like other new Volvos, the XC40 is started by way of twisting a knob on the center console. But the rest is fresh and impressively thought-through.

Volvo has, for example, removed the speakers from the doors to allow storage space for laptop computers and tablets. Those ordering the top-of-the-range Harmon Kardon audio system will still get 13 speakers, including a subwoofer mounted at the base of the windshield, adjacent to the wipers, to further save space. The center console features somewhere to place your phone‑and charge it inductively‑as well as a cubby that can house a tissue box and a hinged flap to a "waste bin," along with the requisite retinue of cupholders.

A power rear tailgate is standard, along with power-folding rear seats. The load space floor can be folded in sections to access additional storage underneath. The rigid load space cover, which helps reduce noise, can be clipped into place under the floor when transporting tall objects.

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Although the interiors of the 90 and 60 family vehicles are characterized by the use of sophisticated colors and materials, the XC40 will offer bolder and unconventional alternatives, including the availability of orange carpet and felt on the floors and doors in R-Sport models. Decor packs include metals with architectural designs and even rubber with a stylized 3-D map showing parts of Volvo's hometown of Gothenburg.

Volvo's new CMA hardware delivers more traditional front-drive proportions and packaging than the SPA platform used for the 90 and 60 family vehicles. The XC40's dash-to-axle is therefore shorter, but rear-seat accommodation is reasonable for what is basically a high-riding C-segment hatchback. There's just enough kneeroom for adults to sit behind a tall driver, but there's plenty of foot and headroom. At 174.2 inches long overall, 73.3 inches wide, and 65.1inches tall, the XC40 is 10.3 inches shorter and 1.5 inches narrower than the XC60. The wheelbase is 106.3 inches—6.5 inches less than that of the XC60.

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CMA shares much of its electronic architecture with the larger SPA platform, and this has allowed Volvo engineers to equip the XC40 with the company's impressive arsenal of active safety technologies, some of which have been upgraded over those in the 90 and 60 vehicles. The operating envelope for the collision warning system, for example, has been upped from 31 mph to 38 mph, the lane keeping system will now automatically steer the car back onto the right side of the road if it senses oncoming traffic during a passing maneuver, and the cross-traffic alert system will automatically apply the brakes if it senses you're not reacting fast enough to the audible and visual warnings. The XC40 will also offer a 360-degree camera and Park Assist as options.

Two versions of the XC40 will be available in the U.S. at launch, each available in two trim levels—Momentum and R-Sport. The all-wheel-drive T5 gets the 250-hp iteration of Volvo's turbocharged inline-four under the hood, while the front-drive T4 gets a less powerful version of the engine. Entry-level Momentum trim models of the T4 and T5 will be priced at $33,200 and $35,200, respectively.

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In Momentum trim the XC40 comes standard with 19-inch alloys, and buyers can opt for a white-painted roof and white-painted alloy wheels, but it's the sportier R-Sport that really captures the spirit of this new Volvo, with its black grille and exterior trim, more aggressively styled 20-inch alloy wheels, and the availability of a black roof and more vibrant colors inside and out. It will likely be the volume seller of the lineup.

The top-of-the-range Inscription trim level, with its own palette of more sophisticated interior and exterior colors (but no option of a separate roof color), will be made available after launch, and Volvo plans to expand the powertrain lineup to include a plug-in hybrid and even a full electric driveline.

The XC40 is the first addition to the Volvo portfolio since the launch of the XC60 in 2008, and the decision to debut the new CMA architecture under an all-new SUV reflects the a dramatic shift in consumer tastes—even in Europe—away from conventional cars to crossovers. Jonas Engström, the vehicle line director for the XC40 and other products to be built using CMA, points out global sales of compact SUVs have exploded from less than 100,000 vehicles a year in 2010 and are expected to reach 1 million a year by 2020. It is the fastest-growing vehicle segment in the world.

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Against that background, the XC40 is not only designed to change perceptions. It's also designed to be a game changer, pitching Volvo squarely against Audi's Q3, BMW's X1, and the Mercedes-Benz GLA in the fight for the hearts and wallets of a whole new generation of urban SUV buyers.