Enhancements for 2006 include a new, simplified package and option structure, re-designed alloy wheels, and improved cup holders. T5 models receive a “pushdown” function to engage reverse gear for the 6-speed manual transmission. Additionally, steering wheel audio controls are now standard on the 2.4i; T5 models gets a new 17-inch wheel design with the Dynamic Trim Package and the IAQS air quality system is now a stand-alone option; and Electric Silver is the new premium exterior color and Brilliant Blue replaces Mistral Green and Safari Green.

Volvo’s S40 sedan is offered in three versions: the value-leading S40 2.4i; the performance-oriented S40 T5; and the all-weather S40 T5 AWD. A normally aspirated, five-cylinder engine that produces 168 hp motivates the S40 2.4i. It can be mated to a 5-speed manual or 5-speed Geartronic automatic transmission. Increasing the fun factor in the T5 is a 218-hp, light-pressure turbocharged I-5 engine that can be equipped with a 6-speed, close-ratio manual gearbox and electronically controlled all-wheel drive.

Volvo's response to the compact sedans offered by Audi, Acura, Subaru and Nissan comes from the S40. This version of the S40 shares a common platform with the Mazda 3 and the European Ford Focus. This allows Volvo to trim production costs and offer the entry-level 2.4i model for around $25K. Available with choices of normally aspirated or turbocharged engines, manual or automatic transmission and front- or all-wheel drive, the S40's wide-ranging flexibility should appeal to a broad segment of the population.