In 2001 the 40 Series went through a facelift ("Phase II"), and a number of technical improvements were simultaneously introduced, such as improved engine management, direct (diesel) fuel injection, extra safety features, larger brake discs, new front suspension and steering, revised rear suspension, larger tires and a slight widening of the track width.
The 40 Series cars were equipped with four-cylinder engines, such as a 1.9 L diesel or 1.6, 1.8,1.9T , or 2.0-litre fuel-injected gasoline engines, with low (2.0T) and high (T4) pressure turbo variants at the top of the motor range. The 1.9-litre was the only engine available in North America.
In the UK trim levels were base, SE and CD.
The Volvo S40 was the first car to earn four stars in Euro-NCAP.
For the station wagon version, see Volvo V50
Introduced in the middle of the 2004 model year, the second generation S40 (known as the 2004.5 Volvo S40) introduced a new design based on the Volvo P1 platform built at the Volvo Cars factory in Ghent, Belgium. At the same time, the V40 was replaced by the V50 estate, also based on the P1 platform and built in Ghent. The S40 was nominated for the World Car of the Year award for 2005 and won the Canadian Car of the Year Best New Sport Compact award for 2005. It has also been elected the South African Car of the Year for 2005 by the South African Guild of Motoring Journalists.
The chassis for this car and the majority of its components were developed by Volvo, however similar mechanical components can be found in the Mazda3 and the European Ford Focus. The engine, a 2.5L 5 cylinder (B5254T3, and B5254S respectively for the turbo and naturally aspirated models) is the latest generation of Volvo's 5 cylinder engines. These inline fives have been continually developed by Volvo since the debut of the engine in the 850, in 1993. The top of the line S40 T5 AWD, as well as the 2.4 and 2.4i, powertrain is still made by Volvo. The transmission is developed with Getrag at Volvo's Koping Transmission Center in Sweden, and the AWD system bought from Haldex Traction of Sweden.