All Volvo models get standard Dynamic Stability Traction Control for 2007, and the S40 sedan and V50 wagon get simplified option and package choices. Front-wheel-drive T5s now come exclusively with an automatic transmission, while all-wheel-drive T5s offer both manual and automatic transmissions. Restyled versions of the S40 and V50 are due in 2008.

When the S40 sedan and V40 wagon made their North American debut in 2000, the concept of a "small" Volvo was foreign to most U.S. buyers. In fact, Volvo had been marketing the S40, as well as its small front-drive predecessors—the 340 and 440—in Europe for some time. The S40/V40, with its 4-cylinder turbocharged engine and long list of safety equipment, was aimed squarely at European stalwarts such as the Audi A4, BMW 3 Series, and Mercedes-Benz C-Class.