2023 Volvo XC40 B5 Combines Cuteness and Competence

The Volvo XC40 is the most desired type of vehicle for everyone these days. Tall, boxy, stylish and comfortable, the XC40 is one of the most charming iterations of the subcompact-luxury-crossover formula. We’ve loved it quite a bit since it first arrived for 2019, and a few updates for 2023 add to its appeal. Along with slightly sharper styling and some fun new colors, changes for the new model year include a revised powertrain lineup and improvements to its Android-based infotainment system.

We tested the 2023 XC40 in its top Ultimate trim level—the Core, Plus, and Ultimate trims have replaced the Momentum, R-Design, and Inscription—finished in the striking $695 Sage Green Metallic paint you see here. It has the more powerful of the two engine options, a turbocharged 2.0-liter inline-four now called the B5 with 247 horsepower and a new 48-volt hybrid system. Opting for the $2000 B5 upgrade also includes all-wheel drive, while the base engine is a less powerful version of the 2.0-liter with 194 horses; this cheaper setup is called the B4 and comes only with front-wheel drive.

Even with the new nomenclature, the engine feels almost identical to the previous T5 setup, and the addition of a hybrid system doesn’t change performance much. It reaches 60 mph in 6.1 seconds, just one second faster than before. That’s pretty quick by this segment’s standards, and the eight-speed automatic transmission is responsive and performs downshifts immediately when you ask for more power to pass or merge. The 48-volt system also launches the engine’s stop-start function, which is more unobtrusive than before.

The all-hybrid lineup is ostensibly meant to improve fuel economy, and it does—just barely. The EPA rates the 2023 B5 at 26 mpg combined, a 1 mpg bump compared to the T5. Its highway rating is 30 mpg, but we only managed a disappointing 27 mpg on our real-world 75-mph fuel economy test. If this XC40 isn’t green enough for you, there’s always the electric version, called the XC40 Recharge, which is more expensive (starting at $54,645) but also more powerful, with 402 horsepower.

Given that the XC40 starts at a relatively affordable $37,445 (our top-trim test car of choice was pegged at $50,190), it’s impressive how much this overall package encompasses luxury basics. The ride is composed and quiet, and the steering is assured if a little lacking in feedback. We love spending time inside the XC40, with its spacious and thoughtfully designed interior that includes plenty of storage space and high-quality materials like open-pore wood, metal trim and beautifully grained plastics. Leave it to Sweden to combine practicality and luxury in a convincing way.

Digital displays abound, including a 12.3-inch gauge cluster screen and a 9.0-inch touchscreen in the center of the dash that controls almost everything. We’d have preferred a few more physical buttons and knobs, but the touchscreen is responsive enough, and the Android interface will be familiar to anyone who’s used a smartphone. Some of the buttons on the screen are too small, as if Volvo forgot to increase them from the size of the phone. The digital gauge cluster can also be a bit cryptic, as we struggled to find the odometer at first—it turns out it only reveals itself by pressing one of the steering wheel buttons.

But this minor complaint doesn’t affect our impression of the XC40. The way it looks, the way it drives, and the pleasant interior more than make up for these tech issues, and it’s a great choice if you’re looking for a small premium SUV. While it’s the cheapest Volvo you can buy, it doesn’t hold much of its more expensive siblings in terms of unique brand appeal and likable character.