[7][8][9] It was based on the P2 platform and, as with its predecessor, was also offered as an all-wheel drive variant marketed as the V70 AWD and as a crossover version initially called V70 XC.

Among the many changes were a completely revised front end, fully painted bumpers and side trim and clear indicator lenses all around.

The Volvo logo on the front grille was redesigned, the square XC-style roof rails replaced the rounded version and black edge stickers on the rear doors were removed.

[41] With the V70 Bi-Fuel[42][43] Volvo continued[44] to offer a factory compressed natural gas (CNG)[45] powered car.

All, apart from the first one, were metallic or pearl paints[1] with Saffron only available for the V70 R.[90] Versions offered included FWD and an AWD, both with either a 4-speed automatic or 5-speed manual transmission.

[93] All except the first two were metallic or pearl paints with Laser Blue only being available on the R.[94] FWD and manual transmission versions were discontinued, only AWD in combination with a 4-speed automatic were available.

[96] All, apart from the first one, were metallic or pearl paints with Laser Blue only being available on the R. A new 2.4L[97] engine was introduced and power increased to 265 PS (195 kW; 261 hp)[98] by use of a larger turbo and variable valve timing (VVT).

[73] The newly introduced 5-speed adaptive automatic was offered but some markets such as Australia, New Zealand and Singapore received the more robust 4-speed auto as used in the 98–99 MY,[96] rear brakes were upgraded to vented discs unique to the R.[99] A dual outlet exhaust ( a first for Volvo )[100] was fitted as standard with the rear bumper modified to accommodate it.

The interior could be ordered in a two-tone design which paired white Alcantara and black leather for the seat covers.

[115] The Insurance Institute for Highway Safety (IIHS) granted the 850/S70 their highest rating of "good" for front crash protection.

[116][117] The 1999 model year and later vehicles minimized or prevented whiplash with an energy absorbing seatback hinge mechanism that is standard equipment.

[132] The new generation featured adhesively bonded construction as opposed to spot welding in key areas, with Volvo claiming the new body to be 70 per cent more rigid than its predecessor.

[134] Standard interior features included a coat hook integrated into the side of the front passenger's headrest, glove compartment with pen holder and toll card, configurable center console and rear seating with a two-position backrest – one favoring cargo – the other favoring comfort.

It featured better ground clearance of 8.2 in (210 mm)[139] thanks to a raised suspension, different bodywork with unpainted bumpers and fender extensions, and AWD as standard.

They had upgraded standard equipment and special styling touches such as specific alloy wheels, blue interior trim,[146] leather seats with contrast stitching[146] and Ocean Race badges on the outside.

It was only available with a Haldex based all-wheel drive system and a 2.5L turbocharged five cylinder engine rated at 300 PS (221 kW; 296 hp) and 400 N⋅m (295 lbf⋅ft) of torque.

The driver could choose from three different settings to vary the car's handling depending on driving style and conditions.

In a 2006 article titled "The Manwagon", The Wall Street Journal linked the V70R to a trend "to lure speed-crazy guys with kids," saying "car makers are trying to transform the dowdy old family hauler into something new,"[156] and that "consumer research had unearthed a surprising number of family men who thought wagons could be cool, if only they had more guts.

Second V70 generation engine radiators featured an optional "ozone-eating" catalytic coating, marketed as PremAir, which converted ground-level ozone into pure oxygen during normal vehicle operation.

[177] Vattenfall offered customers participating in this trial a supply of renewable electricity generated from wind or hydropower.

[178] This test allowed participants to experience the all-electric range at low temperatures, which has been a disadvantage of plug-in vehicles.

The demonstrators were built with a button to allow test drivers to manually choose between electricity or diesel engine power at any time.

[177][180] The first phase of the field trial ended in June 2010 and included 16 families, all employees of Volvo or Vattenfall, who had the car for 1.5 weeks to one month.

Among the key findings of the first phase are:[177][180] Volvo announced in 2009, and confirmed in 2010, the launch of series production diesel-electric plug-in hybrids as early as 2012.

[181] Volvo claimed that its plug-in hybrid could achieve 125 miles per US gallon (1.88 L/100 km; 150 mpg‑imp), based on the European test cycle.

As with previous generation models the XC70 features increased ground clearance, optional all-wheel-drive and some cosmetic differences from the normal V70.

On the outside there are XC-only front and rear bumpers, side skirts, wheel arch extensions and additional exterior door trims all in unpainted black plastic.

For the third generation XC a new feature called hill-descent-control was introduced that limits vehicle speed when driving down a steep embankment.

Third generation V70s are available with the BLIS blind-spot sensor system, which can detect a vehicle otherwise hidden from a driver's view because of its position just off to one side of the car.

Safety options include active-bending xenon headlights, auto dipping main beam, City Safety (which includes pedestrian and cyclist recognition software), Collision Avoidance, adaptive cruise control and traffic following, driver alertness monitoring and lane departure warning.