AN affordable new diesel has been slotted into the bonnet of the Volvo S40 sedan and its V50 wagon sibling.

The new powerplant replaces the high-performance five-cylinder D5 diesel engine and offers a significant price advantage.

While the previous D5 S40 sedan was priced at $46,450, the new four-cylinder diesel has hit showrooms at $42,950.

The D5 V50 wagon was just $500 shy of hitting the big $50,000 barrier, but the new diesel version will cost a far more reasonable $45,950.

The sharper new pricing brings the S40 and V50 diesels within $1500 of their entry-level petrol equivalents.

The same as the engine that has just been introduced in the C30 hatch range, the new oil-burner is a 1997cc common-rail turbo-diesel with an alloy cylinder-head and cast-iron block.

With an 85mm bore and 88mm stroke, it runs a compression ratio of 18.5:1 and pumps fuel in at 1600 bar of pressure, enabling it to generate 100kW at 4000rpm and 320Nm of torque at 2000rpm.

Volvo has teamed the 2.0-litre unit with its new six-speed dual-clutch automatic transmission, which was co-developed with German gearbox specialist. Getrag.

Like Volkswagen’s DSG gearbox, the Volvo unit effectively runs two gearsets, making fast, smooth shifts the key benefits of this twin-clutch transmission.

As with similar transmissions, the configuration also brings economy advantages. Volvo says the dual-clutch gearbox uses around eight per cent less fuel than a comparable torque convertor-type transmission.

Volvo Australia says the new, more economical engine fits better with customers who would consider the S40, V50 and C30 than the more expensive, performance-oriented D5 diesel.

Even so, the company is not expecting the new engine to boost sales. Diesel has so far attracted a tiny 10 per cent slice of S40/V50 sales.

The 2.0-litre diesel S40 and V50 come with the same level of standard equipment as the entry-level S models powered by a 125kW/230Nm 2.4-litre four-cylinder petrol engine.

That includes a comprehensive list of safety gear, including electronic stability control, front-side and side curtain airbags, plus active head restraints. A premium six-CD sound system is standard, as is a full-function trip computer, 16-inch alloy wheels and cruise control.

The four-cylinder petrol models retain a conventional five-speed automatic transmission.