The new small crossover is part of Volvo's plans to expand its line-up, and the new XC30 will be pitted head to head against German rivals such as the BMW X1, Audi Q3, and Mercedes-Benz's own upcoming small crossover, tipped to be badged as the GLC.

The new XC30 crossover will be based on the C30 hatchback's platform, known as P1, and will be engineered for four-wheel-drive capability. Volvo has been spurred by the XC60 crossover's success, and hopes that the XC30 will follow in the trail of its bigger sibling. Volvo plans to offer two versions of the XC30, a standard short-wheelbase one for Europe, and a long-wheelbase version for China and North America.

The XC30 will measure in at around 4350mm long, which is 280mm shorter than the XC60 model. Volvo's development of the XC30 means that the next S40 has been delayed. The new S40 was originally planned to be launched in 18 months time, but that project has been put on indefinite hold for the moment.