I recall a conversation Agent 001 and I had, I think, about a year or two ago.

It wasn't too soon after we saw the then all-new XC90 and it was clear that this vehicle was going to be a win for Volvo.

He asked me, simply: "Why doesn't Volvo just make SUVs?"

Considering how SUVs were taking over more of the take-home mix and it's clear Volvo's best-selling products are its SUVs, it's not a terrible question. In fact it would make a tremendous amount of success. That is, until SUVs are not "in" anymore or gas prices spike.

Spotted in recent months has been the tiny Volvo sport-utility vehicle. Dubbed the XC40, it will be Volvo's compact luxury SUV offering. And if the relationship between the XC90 and XC60 is telling us anything, we're guessing the XC40 will follow the 90's footsteps. Of course it will just be in smaller packaging.

Expected to debut at this year's Frankfurt Motor Show (IAA), the XC40 was recently caught undergoing developmental testing in Europe. See the latest clip of the vehicle getting a work out, below.

It is the first compact SUV of the Swedish brand. Debuts at the Frankfurt Motor Show and will be on sale before the end of the year with a new hybrid engine combining a three-cylinder petrol and 1.5 liter Turbo with 225 hp.

SPIED + VIDEO: Volvo's All-New XC40 Puts Compact Luxury SUVs In The Cross Hairs

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