A few months ago when we first got behind the wheel of a fairly basic, front-drive S60 T5, we realized something, it's a very good car. This was surprising, because cars are generally designed to make us want those attractive options and bigger engines, especially we journalists who sometimes drift from the reality of paying real money for the extras. But in driving the base car, a loaded up T6 seems totally unnecessary. Just give us xenon lights and heated seats and we'd be quite content with what's likely Volvo's best bargain. But then we drove the new 2012 S60 R-Design and, well, let's just say the “R” is finally getting as much attention as the “Design.”

The S60 R-Design has actually been on sale elsewhere in the world for a few months now, but the reason we're getting it late isn't the typical tendency of European companies to give the fans at home first dibs to whatever is new and nice. As the story goes, some of the North American management was over in Sweden last year and ran into some engineers from Polestar, Volvo's official race partner that also happens to tune engines. The Polestar team was just finishing up its performance software for Volvo's turbocharged five-cylinder gas engine, the T5. One of the Americans noted that while that was nice, they’d really be interested in some extra power for the T6, which would give the new S60 R-Design stronger differentiation versus the standard car. Polestar’s team has something to offer, but noted it wouldn't be ready for prime time until week 20 of 2011.

At the same time, the same American visitors were unhappy with the standard R-Design upholstery, which included a combination of leather and cloth. Since the T6 gets standard leather here, it seemed like an inappropriate step down. And guess when the full-leather R-Design interior would be ready, week 20 of this year. Signs like that aren't to be ignored, and so the US-spec S60 R-Design was both delayed and improved.

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As a result of the waiting, the S60 R-Design (the 2012 XC60 R-Design soon gets the same upgrade) is the first model since Volvo added the "Design" part to its "R" cars that features a power increase. It is worth noting that this wasn't a worldwide decision, but a US-specific one. The car makes 325 horsepower (up from 300) and an even more notable 354 lb-ft of torque (up from 325) thanks mostly to more turbocharger boost. We tested this software change on a standard S60 T6 a few weeks ago and saw a 0-60 mph time drop from 5.8 to 5.5 seconds. The software's real advantage, however, is passing power; getting on the gas while already at speed has addictive results. Fuel economy is unchanged and while Volvo says regular fuel will work fine, premium will maximize performance.

The other delay, that one about waiting for the full leather upholstery, means the car is only offered with an all-black interior, as opposed to some other R-Designs that have off-white seat inserts. The front seats feature upgraded bolstering versus the stock T6 thrones, but the superb comfort we've come to expect sitting in a Volvo remains. The leathers used are also slightly different from the base car, which has seat and door inserts using a very heavy grain in the leather that really seems more at home in an XC model than a sport sedan. The R-Design has all soft, smooth leather with a few small sections that are subtly ribbed for a unique look. The R's steering wheel and shift knob get perforated leather and R-Design badges sit on the bottom spoke of the wheel and embossed in each front seat's upper section. Signature blue gauges finish off the interior changes.

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Outside, the R-Design's changes are again rather mild. The front bumper gets some added drama, the rear gets a diffuser and larger exhaust outlets, and all four corners get a new 18-inch wheel design. A small spoiler becomes standard equipment, as does the premium package, which includes a power passenger seat, a moonroof, and xenon headlights. In addition, the mirror caps get a silk metal finish. Only four colors: metallic gray, metallic black, metallic silver, and a non-metallic red are offered. Passion Red, pictured here, is exclusive to the R-Design.

All of those aesthetic changes are great, but the thing that makes the R-Design so special is its unique sport chassis. The standard T6's Four-C adjustable suspension isn't offered on the R, which at first we felt was strange. But then it was explained that even that system's firmest “Advanced” setting is still softer than this new setup. And really, the larger difference is that the Four-C can only adjust dampers. To get a truly sporty car, springs and bushings need to be altered. To that point, the R-Design’s stiffer springs sit 15 millimeters lower, the rear suspension bushings are 20 percent stiffer, and the tie-blade bushings, which mount the rear suspension arms to the car, are an amazing 400 percent stiffer. Additionally, there’s a new strut tower bar under the hood for added stiffness and sharper steering response and quick-responding monotube dampers replace the standard twin-tubes.

While the S60 T6’s dynamic chassis offers a great combination of comfort and agility, the R’s sport chassis officially puts the BMW 3-series on notice. Body control over the tight twisties around Yountville, California and over the quick rises and drops of Thunderhill Raceway is phenomenal. The steering does, in fact, feel even better, and the damping manages to feel sharper without degrading ride quality at all. Stefan Sallqvist, manager of vehicle dynamics for Volvo, challenged his team to “boost the dynamics without making the chassis feel raw," and in that the engineers succeeded. While this is one of those rare Volvos that puts performance ahead of comfort, there’s never a feeling that the guys who designed it were willing to compromise on either aspect.

Despite all the great improvements in both power and handling, there will still be a groups of buyers with whom the R-Design name won’t resonate the same as if there were just the "R" affixed to the end of S60. They’ll seek to find faults with a car that, in all honesty, would out-perform the last-generation S60R on just about any road or track in the country. Here’s the part where we give them a few talking points to latch on to.

The R-Design doesn’t offer a brake upgrade versus the standard T6. They both have 12.4-inch rotors up front and 11.9-inchers at the rear. The system works great in regular driving, even if there could be more pedal feedback, but after a full afternoon on the track, the brakes stopping this 3835-pound sedan started getting pretty tired. Our group of journalists definitely could have done a better job of taking cool-down laps, but after a few hours the left pedal was feeling alarmingly soft.

Our other (and most predictable) complaint is the lack of transmission choice. Only a six-speed automatic is offered, and while it’s a decent unit for daily driving, it is decidedly unsporty. Even with the manual shifter gate, the gears will shift at redline and there are also no paddles on the steering wheel. We’re told adding them is more complicated than it seems and would involve adding controllers under the hood and over the transmission, where there isn’t much free space. A three-pedal option would be ideal, and we’ve lost track of how many times we’ve heard the car’s US product planners say “We’re trying” when asked about it.

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Really though, all we really want is a better two-pedal transmission that can compete with the likes of the dual-clutch boxes of the competition. Consider this: when we ran 0-60 mph tests with and without this car’s Polestar software, we were confident that with a clutch pedal and a harder launch (the car’s all-wheel drive could take it just fine) a few more tenths would fall from the car’s time. Meanwhile, the Audi S4’s seven-speed dual-clutch is so good that the company’s official 0-60 times are even an in the real world, the automatic can be the quicker one. Building a strong sport sedan requires an all-encompassing approach and right now, the S60 R-Design ticks almost every box but does miss a precious few.

During presentations before our first drive, Volvo’s North American team gave us the typical talking points and comparisons we expect at product launches and would readily compare the R-Design to the BMW 335i, the Infiniti G37, and just about any other top model in the segment. But despite the obvious similarities in power and price, they wouldn’t compare the car to the Audi S4, only the 211-hp A4. This is in line with Volvo’s traditionally conservative attitude of talking about its cars, but really, it’s just the two flaws mentioned above keeping the S60 in the confusing middle ground between the more pedestrian competition and top-performers like the Audi.

For most buyers who are looking for a nice car with added visual flash, a ton of power, and handling to match, the R-Design can run with the best of them. It’s really only those enthusiasts looking for a daily driver that can handle an occasional track day who might be disappointed, along with the five-or-so percent of our population that still has an appreciate for the man-and-machine connection that can only come from a manual shifter.

For everyone we didn’t lose in that last paragraph, the R-Design’s price proposition is a solid one. It costs $42,500, some $4600 higher than the T6. However, the $1500 premium package becomes standard and we’ve heard the Polestar software will become a $1500 dealer-installed accessory by December. That leaves just $1600 of difference for the great chassis updates, the design changes inside and out, and the chance to select the bright red paint. That’s not a horrible jump, and it is one of the cheapest ways to get 325 horsepower imported from Europe. And the best all-around package Volvo has ever offered us.

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