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Already introduced on the S60, it’s now the Volvo V40’s turn to receive the company’s brand new line of Drive-E engines and Aisin-sourced eight-speed automatic gearbox. Offered in T5 and D4 forms, the Swedish carmaker claims the V40 now offers the most powerful and lowest emission engines in its segment.

On the petrol front, the new V40 T5 gets the Drive-E 2.0 litre turbocharged direct-injection engine that’s good for 245 hp and 300 Nm. It will replace the existing 213 hp/300 Nm five-cylinder turbo model, which we’ve pitted against the VW Golf GTI, Mercedes A 250 Sport and BMW 125i Sport in our Driven Web Series.

Paired to the new eight-speed transmission, which now includes paddle shifters, the V40 T5 is said to average 5.8 litres per 100 km (17.2 km/l), a big improvement over the outgoing model’s 7.5 l/100 km (13.3 km/l). CO2 emissions have dropped from 174 grammes per kilometre (g/km) to a just 136 g/km too.

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Meanwhile, the updated Volvo V40 D4 gets the Drive-E 2.0 litre twin-turbocharged four-cylinder diesel engine that’s tuned for 190 hp and 400 Nm of torque. This one features Volvo’s own i-ART technology to offer high performance, improved fuel economy and considerably lower emissions.

The diesel variant is sure to get better fuel efficiency numbers, but the difference is staggering. Matched to an enhanced six-speed manual gearbox, the V40 D4’s combined consumption figure is 3.3 l/100km (30.3 km/l), while emitting just 85 g/km of CO2. The V40 Cross Country D4 does 4.0 l/100km (25.0 km/l) and 104 g/km.

Called VEA (Volvo Engine Architecture) in the development phase, the Drive-E engine family will be available on all new Volvo models, including the S60, V60, XC60, S80, V70 and XC70, from May 2014. The next-gen XC90 will be the first new model to pair it with Volvo’s SPA (Scalable Product Architecture) modular platform.