Two phrases that are unlikely to get most people excited are ‘entry level’ and ‘diesel’.

So when Volvo announced that it was adding a 1.6-litre oil burner to the S40 range, it didn’t turn many heads. But choosing the smaller diesel unit over the 2.0-litre engine doesn’t mean having to compromise.

At £1,000 cheaper, the initial cost saving may not seem that great, but with a combined fuel economy of just under 58mpg (that’s the book figure – we are achieving just under 50mpg during the run-in period) compared to 49.6mpg it becomes an attractive proposition. Although it may not be able to match the 2.0-litre for torque, the pulling power is more than adequate and at motorway cruising speeds there is little difference.

The key is to persuade potential buyers not to focus on the small size of the engine but instead experience a drive in the car, because once behind the wheel it is easy to believe you are driving something akin to a 1.9-litre. In terms of smoothness and refinement, the lightweight aluminium unit puts some competitors’ larger powerplants to shame.

The introduction of the 1.6 diesel has also allowed Volvo to drop the starting price of its diesel range to just £16,768, £100 less than a Ford Focus 1.6 TDCi 110 Titanium saloon. While the Focus, which shares the same platform as the S40, will have a similar level of equipment, the Swedish saloon is an attractive proposition for buyers looking for a prestige badge on a budget.

AM’s test car is the entry level S variant, which still comes with a high level of standard kit including twin airbags, dynamic stability and traction control, cruise control, front and rear electric windows and a leather steering wheel and gear lever. It’s also fitted with the optional winter pack (heated front seats and headlamp washers), a premium sound system, which includes a six CD changer, rear park assist and metallic paint – all of which adds up to an extra £1,750.

Price: £18,528
Transmission: Five-speed manual
Performance: 1.6-litre, 110bhp; 0-62mph 12sec; top speed 118mph.
Efficiency: 57.6mpg, 129g/km CO2
CAP RV 30k/3yr: £7,050 (42%)
CAP RV 60k/3yr: £6,100 (37%)
Rivals: Alfa Romeo 156, Saab 9-3, Volkswagen Passat
Mileage: at start 100
Mileage now: 1,797
Faults: None
Likes: Fuel economy, ride
Dislikes: Slightly cramped in rear