VOLVO has always tended to please us with the functionality, safety and solidarity of its station wagons, but more recently we've been less happy about the way they ride and handle on the road.

Front-drive chassis dynamics are something the company seems to have been uncomfortable with ever since they first slung the engine transversely across the engine bay and applied power to the front wheels of the 850 series in the early 1990s.

Once, if you were asked to think of a sweet front-drive chassis, the word Volvo would not have sprung to mind.

So, what about a front-drive Volvo that embraces all the familiar strengths, yet is also nimble and smooth riding?

The new V50/S40 range is all those things. It has discovered something that has eluded Volvo chassis engineers virtually from the day they swapped from rear-drive to front-drive - crisp, accurate steering, good front wheel control under power and a smooth, quiet ride.

The V50/S40's Ford-underwritten chassis is responsible. It's essentially the same as used in the Mazda3 and will be seen under the next Ford Focus. With struts up front and a coil-spring, multi-link independent layout at the rear it's a well-sorted, sweet chassis that would do proud to any quality car.

If Volvo has been talking about a reVolvolution for some time in relation to its styling, this is a reVolvolution affecting what has been something of an Achilles heel for the company.

Now that class-competitive dynamics have been added to the mix, Volvo can finally claim to have a legitimate challenger for BMW 3 Series, Mercedes C-class and Audi A4. It's a little ironic that the most dynamic Volvo is the smallest one.

In its class, the new V50 matches closely the dimensions and weights of the German prestige wagons. In fact it's near the top of the class on most counts, only slightly behind the Mercedes C-class.

And it's priced well, too. At entry level it comes in under not just the Germans, but also the 2.0-litre, four-cylinder Alfa Romeo 156 wagon - 2.4-litre five-cylinder engine and all.

In fact, Volvo gets more adventurous with its wagon line-up than anybody else at this level, offering buyers a choice ranging from the base 2.4-litre five-cylinder to the turbocharged, 162kW T5 version tested here.

Even here the V50 is priced competitively, under the top-of-range variants from all but Alfa Romeo. $62,950 will buy a V50 T5 in five-speed automatic form, or with the manual six-speed gearbox.

What you get with the V50 is a properly packaged wagon, designed to maximise load space above all else - yet the styling isn't sacrificed in any way. With its boat-like prow and tight front and rear overhangs it looks as fresh and appealing on the road as the S40 sedan.

As you'd expect, the business of converting the V50 from five-passenger wagon to something with a little more space up back is dead easy. The split back seat double-folds quickly and simply, opening up a maximum 717 litres of load space and a full floor length of nearly 1.8 metres.

For extra-long loads, the passenger's front seat can be folded flat, providing nearly three metres to play with.

What's especially good about the V50 is that it all happens smoothly, with little effort, and that the floor is long, flat and uncluttered. The floor is actually set rather high - 628mm off the ground - which is more positive than negative because less stooping is required. It also leaves room underneath for a full-size alloy spare.

An optional cargo barrier can be fitted so it protects the cabin in either full-passenger, or full-cargo form, attaching either just behind the front or rear seats.

Very little of this functionality impacts on the comfort or driving dynamics of the V50.

On the road, the Volvo seems just about as quiet as the S40 sedan. It feels solid too - something difficult to achieve with a wagon because of the large, unsupported interior space.

About the only real surprise with the T5 is the deletion of the child booster seats that are standard elsewhere in the range - something to do with the buyer demographics?

With only 34kg more to carry around than the sedan, the wagon T5 has plenty of real punch, especially in six-speed manual-transmission specification.

The all-alloy, twin-camshaft, multi-valve five-cylinder engines used in the S40/V50 are redesigns of the inline powerplants used in other Volvos. They are tighter (200mm slimmer and 25mm shorter) and lighter and, because they adopt a notably long-stroke design, tend to be strong on torque too.

The 162kW 2521cc version seen in the T50 gains an extra 100cc or so over the normally aspirated engine via a further increase of the stroke. Volvo claims a quick zero to 100km/h of 6.8 seconds for the T5 and, unlike some other Volvos, this feels pretty right.

The V50 surges forward strongly with little encouragement needed - and is less prone to the traction problems that beset larger, high-power Volvos. Traction control and dynamic stability control are there to help out if the coefficient of friction becomes a problem for the T5. Lesser models get traction control too, but not the stability control program.

It's not difficult to forget you are driving a wagon here. The V50 feels as balanced as the S40 sedan and, in T5 form, sits tightly on the road with quick responses to the electro-hydraulic steering. It certainly verges on being a sports wagon.

The six-speed manual transmission offers a bagful of ratios to choose from and slips easily and sweetly between gears. An unfortunate omission in this case is the driver's left footrest seen in auto versions - clearly there just wasn't enough space between the floor pedals and the central housing to allow for one (another little fault is the tendency of the driver's left hand to occasionally bump the climate control buttons when changing gears, creating havoc with the chosen settings).

But the V50 cabin is definitely a bright, airy place to be, with very good vision in all directions and adequate shoulder and legroom in both front and rear.

At this level it seemed a little strange that power adjustment was only provided on the driver's seat (although it did incorporate a three-position memory function). It costs just under two grand to provide the same privileges on both sides.

But the V50 does emanate a sense of class and quality that is clearly more than just superficial. The detail finish is what you'd expect of a car designed to challenge the prestige wagon market and the general levels of equipment are pretty attractive considering the sharp pricing.

Leather seats, good eight-speaker sound system (with single CD player) and dual-zone climate-control are all standard in the T5.

Naturally you can go for broke with options, adding a glass sunroof, premium 12-speaker sound system, telephone (a clever system that will delay an incoming call if the car senses the driver is particularly busy at the time), heated front seats (score one for Saab!) and auto-dimming rear-view mirror.

Volvo has a good wagon in the V50. Its decision to offer such a wide range of variants shows how seriously the company takes this segment of the market - a segment it owns and has done for many years.

The T5 is an understated sporty wagon with admirable on-road abilities, plenty of interior space to cope with today's "lifestyle" fascination and a sense that it is well put together, tough and safe.

You couldn't ask for a lot more from a small prestige wagon.