Volvo has made several improvements to its entry-level S40 sedan for 2001. This second year of production brings additional safety features and a new five-speed automatic transmission. Aesthetic alterations include designed headlights, bumpers and fenders. Inside, the sedan receives a more user-friendly dash layout. Safety upgrades include head-protection airbags, dual-stage front airbags and child seat anchors.

The S40 is still only available in the STD trim, which includes most of the necessary amenities. Automatic climate control, an interior air filter, cruise control, cloth upholstery, a split folding rear seat, heated mirrors, full power accessories and remote keyless entry. Buyers can also add luxury items like a CD changer, leather upholstery, a power driver seat and sunroof.

The sedan houses a small but potent four cylinder engine. Displacing just 1.9 liters, the turbocharged four delivers 160 horsepower and 170 pound-feet of torque. Power is directed to the front wheels through a new five-speed automatic transmission, which replaces the four-speed unit from the previous year. Fuel economy is slightly improved, up to 22/32 mpg.

Performance has also benefited from this upgrade. The S40 with the new transmission speeds from 0 to 60 mph in 7.8 seconds, down half a second from the previous model's time. Test drivers report noticeable turbo lag through various points in the speed range, but 45-70 mph acceleration is much improved with the five-speed. The S40 has the sturdy feel of a larger Volvo, and the cabin is aptly protected road disturbances and outside noise. The steering and braking is incredibly responsive, and test drivers report that the S40 is well controlled at even higher speeds.

The S40 sedan finds some stiff competition, with similarly priced entry-level offerings from BMW, Mercedes and Lexus. Many reviewers feel that the Volvo's value in the class is below average, because of the underpowered engine and high cost of options.