The XC50 will tackle popular "baby" SUVs such as the X3 and new Toyota RAV4.
Other future newcomers to this lucrative niche market include the Mercedes MLK and the VW Bedouin. Audi is also eyeing this segment and rumours have it that Ingolstadt is planning a Q5.
Volvo already hinted in 2003 with the Urban Jungle Rider concept car that it could build a model to slot in below the XC90.
If the XC50 goes into production if will share its underpinnings with the next generation Freelander.