The Volvo S40, a 4-door luxury sedan, has undergone two generations; one in 1995 and the second one in 2004. The second generation of the S40 has the distinction of being referred to as one of the best luxury cars that would appeal to young, affluent drivers by Forbes. Female drivers find the Volvo S40 appealing; their responses to a survey conducted by J.D. Power and Associates named it as the most popular vehicle for this group.

The summer of 1995 was then the S40 sedan was first made available to buyers. The V40 station wagon was also offered from that point. Manufactured in the Netherlands at the NedCar factory, these models were the result of a joint venture between Volvo and Japanese car maker Mitsubishi Motors. The Mitsubishi version using the same platform was known as the Carisma, but it did not see the same level of success as the version offered in Europe.

The second generation of the S40 was introduced to consumers in 2000. Phase II, as it was known, was given a facelift in outward appearance. This version also offered buyers a new front suspension and steering, larger brake discs, direct fuel injection, and improved engine management. Larger tires and a slightly wider track width were also offered at this time.

The 40 Series vehicles were fitted with four-cylinder engines in four sizes: 1.6 L, 1.8 L, 1.9 L (Diesel or 2.) L fuel injected versions. North American buyers could only buy a Volvo S40 with a 1.9 L engine, which provided 168 hp.

Partway through the 2004 model year, the second generation of S40s hit the market. This version was based on the Volvo P1 platform, and was built at the company factory located in Ghent, Belgium. The V40 was replaced at this point by the V50 estate (station wagon).

The Volvo S40 was one of the nominees for World Car of the Year for 2005. This model did with the designation as Canadian Car of the Year in the Best New Sport Compact category that same year. This is not the only place where the S40 was recognized, though; the South African Guild of Motoring Journalists put the matter to a vote and declared the it the South African Care of the Year in 2005. In the year of the gas hike, the 2008 Volvo S40 offers a 19 mpg for city driving and 27 mpg for highway usage, and comes closer than ever to the Audi A6 in build quality.