For nearly a decade the Volvo XC90 has been a first-generation vehicle pitted against a series of sleek newer-generation rivals, but the big Swede remains a popular and worthy choice when it comes to seven-seat luxury SUVs.

In fact, the Volvo XC90 has been the best-selling luxury seven-seater in Australia for the last five years running and is currently the brand’s second largest volume seller behind the XC60.

Clearly it’s a vehicle that’s got a lot going for it, despite its unusually long life cycle – which has been on the road since 2003 and won’t be replaced until 2014.

Its winning formula is unlikely to be down to the XC90’s styling, which could be seen as a bit tired next to its smaller, but more contemporary, sibling, the XC60.

So why is Volvo still striking gold with this grand dame against such stiff competition as the Audi Q7, BMW X5 and just-launched Mercedes-Benz ML-Class?

Few other luxury SUV manufacturers can match the Volvo XC90 for its value for money proposition.

With a starting price of $69,990 (before on-road costs are added) for the entry-level R-Design 3.2-litre petrol model, the XC90 undercuts the competition by at least $10,000, and in some cases by $20,000 as with the Audi Q7 quattro 3.0-litre TDI that sells for $90,500 (before on-road costs).

There’s also no doubt that Volvo’s reputation for vehicle safety innovation continues to resonate with parents.

Those innovations include full-length inflatable curtain airbags (1998), driver and front passenger seat airbags (1994), side impact protection system (SIPS – 1991), whiplash protection system (WHIPS – 1998), and roll stability control (2002).

Our test vehicle is the Volvo XC90 D5 R-Design – a five-cylinder turbo diesel with a sports-tuned chassis and a host of other R-Design features including quad-exhaust tips, leather trim, sports leather steering wheel, gearknob and floor mats.

It sells for $72,900 (before on road costs are added) and is the most popular variant in the XC90 line-up so far in 2012.

The R-Design alloy wheels and bodykit might give the XC90 some design flair, but features that have become a mandatory these days on anything billed as a luxury vehicle – such as LED daytime running lights inside the headlamp assembly – are noticeably absent from this Volvo XC90 package (they are instead part of the lower foglights) and partly betray the model’s true age.

What’s not missing from the Volvo XC90 is space. There’s an impressive 615 litres of cargo capacity behind the second-row seats. Fold them forward and that expands to a full load capacity of 1837 litres.

It’s by no means the class benchmark, but with clever seat architecture we’d be surprised if you ran out of space in the XC90.

All seats (including the third row and front passenger seat) fold dead flat, allowing for extra-long items such as ladders and 9-foot Malibu surfboards to be carried on board.

The superbly supple and ergonomically designed stitched leather seats even extend to the third-row pews, which are able to comfortably support children and adults up to 160cm tall.

We especially like Volvo’s trademark child booster seat that’s been integrated into the second-row’s middle seat and conveniently slides forward to be closer to the front driver and passenger seats. It simply pops up via an easy-to-use lever and is able to support children anywhere from 15 to 36 kilograms.

Meanwhile, the second row outer seats also slide forward and back, thereby opening up rear legroom to near limousine levels, if the third row seats aren’t in use.

Rounding up Volvo’s smart design is the split tailgate that doubles as a load-bearing bench if needed.

Unfortunately, while there are enough proper metal accents and soft touch plastics throughout the XC90’s cockpit to pass the basic luxury test, it still falls short of its main rivals.

The satellite-navigation system is accessed via a screen that rises awkwardly out of the dashboard and isn’t particularly high-resolution, either. We also found its functionality to be less intuitive than systems from Audi, BMW, Mercedes-Benz and Land Rover – so overall Volvo’s offering looks more like an afterthought rather than a fully integrated unit.

There’s no such criticism of Volvo’s premium sound system, with 12 speakers and Bluetooth audio streaming. It produces a strong sound with exceptional clarity.

The thick-rimmed R-Design sports leather steering wheel is also another quality item on board the Volvo XC90, but on the same note there’s no keyless entry or push-button start on this vehicle.

The large-size quad exhaust pipes are more for show than outright go, but the XC90 D5 isn’t exactly short on torque. The 2.4-litre turbo diesel generates 147kW of power and 420Nm of torque and moves this 2125kg SUV from 0-100km/h in 10.3 seconds. Top speed is 205km/h.

There’s noticeable turbo lag from idle, followed by a rush of boost from 1900-2800rpm where peak torque occurs. It’s not the most refined diesel engine in the segment, either, with plenty of clatter down low, but moderate acceleration produces plenty of punch along with a thoroughly sporty growl for an engine note.

And even though 50 per cent of the vehicle’s drive is sent to the rear wheels during heavy acceleration, there’s also some tendency for mild torque steer.

The D5 engine is mated to a smooth-shifting six-speed automatic transmission that can be used as a sequential manual, though there’s little point to it given the slower-than-usual shifts – up and down the ratio range.

Where the Volvo XC90 scores high is in its general driveability. Despite its considerable size, the XC90 never feels like you’re driving a large, seven-seat SUV – except of course if you need to turn around in a tight space. Its 13.1-meter turning circle is atrocious.

The electro-hydraulic, speed-sensitive steering is light enough for easy parking manoeuvres and weights up nicely as speed increases. It also produces a surprisingly quick steering response along with some communication through the steering wheel thanks to additional R-Design tuning.

The R-Design chassis also benefits from firmer shock absorbers, stiffer anti-roll bars and 19-inch alloy wheels, so there’s less body roll on turn in than you might expect from this luxury SUV.

The drawback is that the ride is less cushioned over poorly maintained asphalt and larger potholes can produce a harsh reaction through the cabin.

Fuel economy from the Euro 5-compliant D5 engine isn’t too bad, though, with CarAdvice achieving an average fuel consumption over the seven-day test period of 8.5L/100km (as shown on the average fuel consumption readout). The XC90’s relatively low weight also helps keep CO2 emissions in check, with just 233 grams per kilometre.

It’s a decent result, but pales when you consider BMW’s more powerful X5 3.0 diesel generates 180kw/540Nm from 1750-3000rpm and has a combined fuel consumption of 7.4 litres/100km, yet emits just 195g/km of CO2.

Apart from the extensive inventory of safety systems mentioned earlier in the review, the XC90 comes with a raft of additional safety features including active bending lights that are motorised headlamps that turn up to 15 degrees to illuminate the road when cornering at night.

There’s also roll stability control that uses a gyroscopic sensor that registers the XC90’s lean angle and rollover risk. In the event of a potential roll, the system will either cut power to the engine or brake one or more wheels in order to reduce the risk.

However, while the Volvo XC90 misses out on the car maker’s innovative City Safety and adaptive cruise control active safety systems from the XC60, you can expect those features and more to appear on the XC90 replacement in 2014.

It would seem that after nearly a decade in the market, Volvo finally needs to play catch-up in terms of design flair, interior finish and overall economy if the XC90 is to maintain its lofty sales figures.

Yet with a value-for-money proposition few can match, the current Volvo XC90 continues to keep the Swedish brand in the large luxury SUV mix.