We've been to the company's headquarters in Sweden to find out how the system works.
How does it work?
The new airbag is designed to protect pedestrians from injury at collision speeds between 12mph and 31mph.
It uses seven sensors around the front of the car to detect the type of impact, and then sends this information to the car's on-board computer for analysis.
If the system interprets the object as a human leg, it first releases the bonnet hinges by firing two pyrotechnic charges. Almost immediately, the airbag inflates, raising the bonnet by 10cm in the process to help absorb some of the impact.
The exposed area of the airbag covers the lower edge of the windscreen and the A-pillars the bits of the car that cause the most serious head injuries.
This airbags could reduce pedestrian fatalities by 5%
How much does it cost?
All V40s are fitted with the pedestrian airbag as standard, although you will have to pay to have the system reset if it ever goes off.
That's unlikely to worry you if you've been unlucky enough to hit someone. However, there's always a chance the airbag could be set off by something else an animal, for example that the system has wrongly identified as a person.
Either way, you or your insurance company will need to fork out around 500 to have the airbag replaced. There will also be an even bigger bill for a new bonnet, which will be damaged by the airbag firing.
However, given Volvo's claim that the system can reduce pedestrian fatalities by 5% and serious injuries by 14%, that seems a price definitely worth paying.