VOLVO Car Australia (VCA) is gunning for the burgeoning premium small-car diesel set with its C30 D5.

Available now from $42,450 for the six-speed manual and $43,950 for the five-speed Geartronic automatic, the D5 undercuts the standard Audi A3 2.0 TDI DSG ($48,500), auto-only BMW 120d ($48,000) and Mercedes-Benz B180 CDI manual ($45,500).

It is also lineball with the previous C30 range-topper, the 169kW/320Nm 2.5-litre turbocharged petrol-powered five-cylinder engine T5.

However, considering the T5’s standard ESP/DSC stability control function costs $2190 extra on the D5, the turbo-diesel C30 eclipses its turbo-petrol sibling to be the most expensive model in the range at $44,640.

And that gap becomes a chasm (extending to $56,800) when other standard T5 features are added to the D5: electrically adjustable driver’s seat ($1950), leather seats ($2850), heated front seats ($315), leather steering wheel ($550), leather gear knob ($200), six-stack CD audio ($2145), Performance Sound radio and speakers ($1350), Bi-Xenon headlights with wash system ($2350), puddle lights with electrically retractable door mirrors ($250), Interior Air Quality System with sensor ($250), auto-dim rear-view mirror ($390), rain-sensing wipers ($250), and 17-inch alloy wheels ($1500).

The D5’s arrival, along with the new $34,450 C30 S opener and continuing $38,450 LE models (both utilising a 125kW/230Nm 2.4-litre non-turbo petrol-powered five-cylinder engine) doubles the range to four.

As its name suggests, the D5 has a diesel-powered five-cylinder engine that is closely related to the 2400cc 20-valve twin-cam turbocharged unit that powers the larger S40, V50, XC70, S80 and XC90 models.

Using a particulate filter and driving the front wheels, it delivers 132kW of power at 4000rpm, and 400Nm of torque from 2000rpm to 2750rpm in the manual C30 D5. Automatic versions produce 350Nm from 1750rpm to 3250rpm. In comparison, the 169kW T5 offers 320Nm.

The D5 also trumps the T5 for fuel economy (6.2/6.9L/100km combined manual/auto versus 8.7/9.4L/100km) and CO2 emissions (164/182g/km versus 208/224g/km), but its 7.7/8.4 second manual/auto 0-100km/h sprint times are 1/1.3 seconds behind the T5.

At 225/220km/h for the manual/auto, the D5 is also 15km/h slower respectively for top speed when compared to the T5.

In all other respects, the D5 is identical to other C30s. That means it uses the same coil-over strut front and multi-link independent rear suspension system with anti-roll bars all round, electro-hydraulic powered rack and pinion steering set-up and four-wheel disc brakes.

The three-door four-seater C30 is built on the same C2 platform as the S40/V50, and shares most of their underpinnings. It is built in Belgium, and is also related to the current Mazda3 and Ford Focus.

VCA managing director Alan Desselss said he was delighted with the response last year of the C30 LE and T5, saying that the 65 sales per month recorded were around 15 units more than anticipated at the model’s March launch.

With the D5 and entry-level S now on stream, he is predicting around 75 units per month – averaging to about 900 for 2008 – with the diesel accounting for about 15 per cent of that tally.

For now the C30 will remain as a five-cylinder engine line-up, but the lower-priced four-cylinder models already available in Europe (in 1.6, 1.8 and 2.0 petrol and 1.6D and 2.0D turbo-diesel guises) may eventually be imported – although no decision has yet been made.