Everyone wants cleaner, greener and leaner cars. Even executive-types who drive limousine-style Volvos aren’t immune to the pressure of rising fuel costs, it seems.

That’s why Volvo has spent a lot of time (six years) and money (two billion Swedish krona) to create a new family of engines which are designed to more efficient, yet more fun to drive.

The first of these new engines is a 2.0 litre diesel which is now available in a number of Volvos including, tested here, the S60 executive express. It is a four-cylinder unit but it is designed to feel, sound and operate like a much bigger engine.

The engine, part of the Volvo Drive-E powertrain family, is astonishing. I’m rather used to diesels feeling as smooth as petrol engines these days, but not to this extent. You would never believe that this was a diesel engine, let alone a relatively compact one. I’ve driven V6 petrol engines which didn’t feel as silken.

Yet, the economy figures are pleasing, too, offering 65mpg around town and upwards towards 80mpg on a run.

This is a major boost for the S60, a car which Volvo is tilting against BMW, Audi, Mercedes-Benz, Lexus and co. In recent years it has been a minor player against these big guns, but with such an interesting engine option you can see it taking off in a big way now.

The S60 is a handsome motor and while it is up against some impressive motors, there really isn’t a better car to drive. The cabin is stunning in its comfort and simplicity. Only Audi comes anywhere near rivalling Volvo’s knack of getting interiors just right.

The cabin displays a softer and more sophisticated look. It’s also telling that the car’s centre console is angled towards the driver – a clear sign that the S60 has been designed to appeal to the keen driver. Elsewhere it’s a case of expanding on recent design themes, with the switchgear, ergonomics and seat comfort being that bit better than the competition.

You will notice more legroom in the back, though. A little better than its predecessor and some rivals, which does much to confirm the S60’s position as a versatile choice for executives – there won’t be an issue over adults feeling the pinch in the rear.

Staying with the sensible aspects of the car, it should come as no surprise to learn that Volvo has ratcheted up the active and passive safety elements of the car, plus being an R-Design model it is lavishly equipped. Extras here include Park Assist Pilot (£850), security pack (£700) a Sensus Connect with premium sound system (£400), rear parking camera (£375) and, as if you really need it, a heated steering wheel (£200).

It also has Driver Support pack (£1,900) which comes with pedestrian detection via front mounted cameras, plus adaptive cruise control and a plethora of driver warning devices and braking assistance that works together with all the active aids to bring the car to a stop (or at least apply maximum braking force at higher speeds) to minimise the consequences of driver inattention or the acts of other road users.

The camera and clever computer can even distinguish between adults, children and dogs running across the road.

Granted, you hope to never have to use such systems, but they’ve now reached a stage where they can be trusted, which is testament to Volvo’s persistence in the field of car safety.

With its high levels of standard equipment, stand-out styling, class-leading safety technology and levels of driver enjoyment and refinement not seen from a Volvo in some time, this second-generation S60 offers the Volvo faithful and new converts a credible alternative to a purchase from the ‘Big Three’ Germans firms.

But it’s the engine which will make or break this car.

Derek Crabb, vice president powertrain engineering at Volvo Cars, said: “We have created smaller, more intelligent engines with power curves that give exciting driveability compared with engines with more cylinders, yet deliver the fuel economy of only four cylinders.”

The Drive-E engine range basically consists of two four-cylinder engines, one common rail diesel and one direct-injected petrol version.

They replace eight engine architectures on three platforms. In the future, Drive-E diesels will range from 120 to 230hp while petrols will start at 140hp and go all the way up to 300-plus bhp.

Volvo S60 D4 R-Design Nav PRICE: £38,875 as tested. Model starts at £30,695 ENGINE: A 1,969cc, four cylinder unit generating 181bhp via six-speed manual gearbox PERFORMANCE: Top speed 143mph, 0 to 60mph in 6.9 secs COSTS: Town 65.7mpg; country 78.5mpg; combined 74.3mpg EMISSIONS: 99g/km WARRANTY: Three years, 60,000 miles