The new XC60 is Volvo’s latest assault on the premium car market that’s been dominated in recent years by the German trio of Audi, BMW and Mercedes.

It sits on the same platform as it’s big brother, the XC90, and uses the same engines. It is, however, shorter, has five seats instead of seven and shaves several thousand pounds off the asking price.

That doesn’t make it cheap, though, and with rising prices come rising expectations. The question is, can the XC60 live up to them?

The previous model, which launched in 2008, was a big hit with public and press alike, but the new car is facing stiffer competition in a much more crowded marketplace.

The Swedes haven’t strayed too far from the XC90 design template – the Hammer of Thor daytime running lights, the large grille with prominent badge and the tall L-shaped rear lights all make an appearance – but in a more compact form.

Personally, I think its reduced dimensions gives the design a more balanced look and a slightly more dynamic profile. Certainly, from the outside at least, I don’t think you would be selling yourself short by opting for the XC60 instead of its big brother.

The driving position is excellent, courtesy of a generous amount of adjustment in the steering wheel and driver’s seat, which is also wonderfully supportive and comfortable. Height and lumbar adjustment is electric on all trim levels, but reclining the seat or sliding it fore and aft is a manual affair on Momentum and R-design models. If you want to go all-in on electric adjustment then pick the Pro Pack or top-spec Inscription.

Like all Volvos, the XC60 showcases the firm’s latest safety kit. The highlight is the semi-autonomous cruise control, which will accelerate, brake and steer the car at speeds of up to 80mph – although you have to keep your hands lightly on the wheel if you don’t want the system to shut down.

As is the norm inside modern Volvos, physical controls are kept to an absolute minimum and, instead, you get a nine-inch touchscreen that, unusually, is in portrait orientation. I suspect that’s in order to make you feel as comfortable interacting with it as you do your mobile phone or tablet and, indeed, the usual gesture controls – swipe, tap, pinch – are all in play. The screen is bright, crisp and responsive but that is of little consequence when you’re trying to adjust one setting or another while driving.

Sat-nav is standard across the range but, while DAB radio, Bluetooth handsfree calling and audio streaming and a 10-speaker audio system are also included, you have to pay extra for Apple CarPlay and Android Auto smartphone mirroring. The optional Bowers & Wilkins delivers spectacular audio, but it’s expensive, so I’d probably suggest that’s something for serious music-lovers only.

Volvos now boast some of the best interiors in their respective segments. The XC60’s passenger space easily rivals anything from Audi, BMW or Mercedes in terms of outright quality. There’s a liberal, but tasteful, use of wood and metal trim that gives the cabin a light and airy feel. Everywhere you look, and everywhere you touch, oozes quality, even the few buttons and switches that remain feel robust and operate with a well-judged slickness.

Refinement is excellent. Engine noise is supressed superbly, even under heavy acceleration, while tyre roar is well-managed at speed. The mirrors, do, however, whistle up a fair amount of noise when the pace picks up.

Wherever you sit in the XC60 you won’t be complaining about head or legroom The front seats will slide aft far enough for even the most long-legged of passengers to get comfortable and, even with them pushed all the way back, there’s still enough room for three adults in the back.

The XC60 is wider than many of its key rivals, too, so shoulder room is impressive but, if you do end up in the middle of the rear bench, you will find yourself having to straddle a raised tunnel.

There’s a deep bin beneath the arm rest and a cubby behind the gearlever with a sliding cover. The door pockets and glovebox are also a decent size.

There’s no option to add an extra row of seats so, if you need additional passenger-carrying capacity you face the choice of either upgrading to the more expensive XC90 or looking elsewhere.

The boot will hold 505 litres of your luggage, which is slightly below the class-best, and that increase to 1,432 litres with the 60/40 folding rear seats stowed. If you splash out for the optional Convenience Pack dropping the rear seats is as easy as pressing as button. The boot is a good shape, with a nice, flat, floor so, even though it isn’t the largest, it’s easy to make the most of what it has got. You also get a through-load hatch in the middle seat for your skis, and a powered tailgate.

There’s a choice of just four engines, and they’re all four cylinder units. My T5-spec review car was fitted with the 247bhp turbocharged petrol power plant. It feels quick and responsive when up to speed but you have to work it quite hard to get away smartly from a standing start.

Every XC60 is fitted with an eight-speed automatic gearbox as standard. It swaps ratios smoothly in normal driving conditions but can be a little hesitant on kickdown.

Air suspension is an option on the XC60 and generally gives a composed and well-controlled ride. Indeed, in Comfort mode the big SUV makes quick work of low-frequency peaks and troughs on high-speed roads, offering a level of ride comfort that stands comparison with the very best in class.

Sadly that isn’t quite the case when the terrain becomes a little less predictable. A sharp-edged pothole is likely to make itself known with a bit of a thud but it is, by no means, frequent nor unbearable.

There probably aren’t many people who would buy a Volvo expecting a sporting masterclass and so is the case with the XC60. Being a high-riding SUV means that the laws of physics are already working against it, but the basic set-up allows far too much pitching and wallowing when it’s pushed hard to encourage attempts at swift changes of direction.

The steering is nicely weighted around the straight-ahead, so the car feels stable and secure on motorways but, while it displays a decent amount of precision in corners, it’s too light to instil any confidence. Even switching to dynamic mode, while adding some welcome weight to the steering, does nothing to eradicate the overwhelming feeling of confidence-sapping detachment.

The XC60 isn’t cheap, but it isn’t meant to be. It’s a premium product competing against premium rivals and is priced accordingly. For your money you get a superbly built, safe and generously-equipped SUV. It takes a more comfort-orientated approach to driving dynamics than its rivals but there cant be many people who want to fling their SUVs around corners like low-slung sports cars, can there? I thought not.

Volvo XC60 T5 AWD R-Design Pro Auto

Price: £47,285

As tested: £54,330

Engine: 2.0-litre 4-cylinder turbocharged

Transmission: 8-speed auto

Max power: 253bhp

Max speed: 137mph

0-62mph: 6.8sec

Urban: 30.4mpg

Extra urban: 42.2mpg

Combined: 36.8mpg

Emissions (CO2): 178g/km

For more information visit www.volvo.co.uk