Volvo Cars has launched its new three-cylinder Drive-E powertrain in the XC40, the company's first entry into the compact SUV segment.

The new powertrain is the first three-cylinder engine in the company's 91-year history.

The all-new 1.5-litre, three-cylinder, direct-injection petrol engine was developed in-house using the same modular design as Volvo's four-cylinder Drive-E engines. The three-cylinder powertrain (badged T3) comes with a six-speed manual transmission. An optional eight-speed automatic transmission will follow next year.

In line with Volvo Cars' strategy to continue improving economies of scale, the engine will roll off the same production lines as the company's four-cylinder petrol and diesel engines.

"Our new three-cylinder engine is an exciting development for the XC40 and for Volvo Cars in general," said Alexander Petrofski, senior director cluster 40 at Volvo Cars. "This compact engine design provides the flexibility we need as we introduce more powertrain options for XC40 customers."

Volvo's current D3 150 hp diesel and T4 190 hp petrol engines are also added to broaden the XC40 engine offer.

Furthermore, the new three-cylinder powertrain has been deliberately designed for integration into Twin Engine plug-in hybrid cars. A hybridised as well as a pure electric powertrain option for the XC40 will be added later. Volvo said more details will be available in due course.

XC40 customers now also have more choice in trim levels, including entry-level Momentum and dynamic R-Design versions, plus the new Inscription trim level.

Inscription trim offers exterior styling choices with 18", 19", 20" or 21" wheels, skid plates, side window and grille mesh chrome, plus model-specific paint colours.

Inside, Inscription adds a newly designed crystal gear knob (on versions with an automatic transmission) and the attractive Driftwood deco inlays, which Volvo introduced in its award-winning XC60 mid-size SUV.

"The new XC40 is a youthful car that suits drivers with a strong sense of individuality," said Petrofski. "We want our customers to be able to make a statement their way – subtle or otherwise – and so we want to offer them more choices, both in performance and styling."

UK prices for the XC40 T3 start at £27,905 on the road, with Inscription versions available from £30,405. First customer deliveries are expected this summer.

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