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I've been driving this car for nearly 2 years, and overall it's been a trouble-free experience - although not a hugely exciting one, but then again I'm not sure volvos are particularly designed with excitement in mind.
To live with the car is very acceptable, the interior comfort is quite good,.However, the rear seating area is smaller than you would expect of a car of this size. 3 people can be accommodated in the back, but this is far from comfortable for any longer journeys. Also, the front seats are not as supportive as those found higher up the Volvo range, such as in the V70 or even the discontinued 960 models. If I'm looking for niggles, I should probably mention than the glove-box for some unknown reason is designed to kneecap anyone curious enough to attempt opening it. While the cup holders are more like token effort small indentations between the front seats, which in reality are only deep enough to prevent something as short as a shot glass from falling over; not that I've used shots in the car (or any other alcoholic beverages I should probably point out!), but i suppose they may come in useful for passengers who were hoping for a more eventful ride - the s40 is far from an exciting car.
The performance of this car is very adequate for normal driving. 3rd gear is quite effective for overtaking and general fast driving, while 5th provides quiet and economical cruising. Although 5th gear I find to be quite lacking in acceleration below the cars torque band, which doesn't suit lazy drivers as sometimes it's necessary to change down on dual carriage ways for overtaking. My only (sensible) complaint regarding performance is that 2nd gear in my particular vehicle is quite stiff to engage, which makes fast down changes difficult just before tight corning.
The handling is reasonably good, although the steering could be more communicative. Also, body role during high(ish) speed cornering could also be improved, as although the steering remains responsive the body role does give the impression of declining levels of rear grip, which results in a slightly nervous handing balance, which doesn't inspire confidence (Although apparently this handling characteristic is quite dependent on the tyres fitted). As with all front wheel drive cars understeer can be a problem if cornering speeds are misjudged, similarly torque steer can be an issue if you give the accelerator too much of an enthusiastic prod while exiting roundabouts.
In conclusion, this is a well built, safe family car - so basically like any other Volvo you've ever seen. If carting the family about is all that's needed it's a good choice, but if you're a fan of driving you'd probably best look somewhere else - or at least to the T4 model, which is genuinely quick - think near on150mph top speed and 0-60 in sevenish seconds, but you should also consider the insurance jump from the 1.8s group 9 or 10 upto the T4s group 15 or 16.