It says its new vehicle 'challenges the premium segment for SUVs' and is a 'milestone on the way towards 600,000 cars'.
'XC90 will increase our sales,' Volvo Cars chief executive officer Hans-Olov Olsson said: 'It will take us closer to 500,000 units per year.'
The manufacturer hopes to sell 50,000 XC90s per year, with 25% of sales in Europe.
It says that in Europe, the SUV is traditionally a niche vehicle, but has gained popularity during recent years partly due to 'newer, smaller sedan-looking SUV-concepts.'
It adds that the premium segment for SUVs in Europe increased by 20% in 2001, from 83,000 vehicles in 2000 to about 100,000 last year.
The five largest markets for the vehicles are France, Germany, Italy, Spain and the UK.
Olsson said the manufacturer enters into the segment 'with great confidence'.
He added: 'We have a golden opportunity in Europe. The segment is expanding, and we enter the market with a very distinct product. The Volvo XC90 takes the premium segment for sedan based SUVs into a whole new dimension. It is the first generation of SUVs. A unique offer which our competitors can not match at the moment.'
Volvo's sales fell in Western Europe last year to 224,660 vehicles from 230,504 the previous year in what the manufacturer called a 'sharply declining market'.