Car companies have had a challenging few years and few more so than Volvo.

But the Swedish company, now part of the Chinese Geely group, is bouncing back. Sales are rising, thanks to a series of important and well-received models and there’s definitely a feeling that all is well. And so it should be. Volvo is a brand renowned for quality and solidity. It was with very good reason that it became a car of choice for middle classes in the 1970s.

Did it lose its way? Did it forget it roots? Possibly. But now, after ownership by Ford and now with a Chinese firm, Volvo is back to doing what it does best: making sensible cars at a reasonable price and the V40 is arguably the best Volvo in years.

And, as ever, simple things pay off. Volvo’s sales in September were up 22 per cent on the same month last year. The figures follow the successful introduction of the new S60, V60, XC60, V70, XC70 and S80 models, along with continued demand for the premium V40 hatchback. The V40 is tested here. It’s a cracking car which has won numerous plaudits.

It is a car which has been lauded for its interior quality, equipment and technology – including the world’s first pedestrian airbag – plus its dynamics and overall premium feel.

The V40 is a car which is up against some formidable rivals but it does have a lot to commend it.

Volvos have always been comfortable but this version is young, well designed and smart, too. It is full of safety features.

Priced from £18,955, the Volvo V40 is available with a wide choice of engines. Customers can also opt for the sports-inspired V40 R-Design models, or – for a more rugged look – the V40 Cross Country. Petrol engines range from the new entry level 120hp T2 up to the powerful 250hp T5 Auto, while diesel engines include the 88g/km CO2 D2 diesel unit, which is free from road tax and can return up to 83.1mpg fuel economy (combined cycle).

Standard equipment includes DAB radio, pedestrian airbag, City Safety, Bluetooth, climate control, electric windows and 16in alloys.

Tested here is a 2.0 litre five-cylinder diesel which is smooth, refined and fairly economical. It zips to 60mph in 9.1 seconds, yet returns more than 74mpg on a run. These are figures which would have been unbelievable a decade ago.

No wonder the V40 is the company’s top-selling model in the UK.

Yes it’s based on a Ford platform and is powered by some of the Blue Oval’s engines, but the suits at Volvo are keen to stress that the overall package is all their own work – from the funky styling to the car’s impressively low emissions numbers and cabin refinement to rival anything from Germany.

That’s right, Volvo is aiming its sights at the traditional European makers with its V40, which it would like you to think was a worthy alternative to the likes of BMW’s 1 Series and Audi’s A3.

The firm is chasing the ‘compact premium’ carrot, and the V40’s refined cabin with high quality materials is the first sign of exactly how serious the Swedish firm is.

For all the car’s edgy exterior appearance, the V40’s interior will look familiar to fans of the brand. Volvo’s trademark ‘floating’ centre console has been retained along with switchgear and display ergonomics that would shame the competition.

Low CO2 and fuel consumption have become big talking points back at the mothership in Sweden.

It’s plain to see from the V40’s cabin that it’s going to be an upmarket experience – ride comfort, space for front seat occupants, equipment levels. With Volvo now free of its Ford shackles and safely in the arms of a more understanding parent company, the Swedish firm’s new V40 is an impressive start to the next chapter in the car maker’s history.

With the V40’s exterior mirroring the trend set by the S60 and V60, there’s a more cohesive look and feel to this new family of Volvos.

Granted, the good work started with the larger 60 series cars before the change of ownership, but this new V40 is a symbol of future success.

Volvo V40 D3 ES 5-door PRICE: £21,845. The range spans £18,995 to £34,130 ENGINE: A 1,984cc five-cylinder diesel engine generating 150ps via six-speed gearbox PERFORMANCE: Top speed 130mph, 0 to 60mph in 9.1 seconds COSTS: town 53.3mpg; country 74.3mpg; combined 65.7mpg EMISSIONS: 114g/km WARRANTY: Three years, 60,000 miles