Volvo, now owned by a Chinese holding company, introduced the feature -- an enhanced version of Volvo's pedestrian detection system launched in 2010 -- at the Geneva Motor Show.
The system -- a radar unit in the car's grille and a camera located between its windshield and rear view mirror -- can detect multiple pedestrians and cyclists at the same time, Volvo said.
A spokesman for Volvo's British arm said company engineers were also working on a version that could detect animals.
Volvo engineers spent an evening at a safari park where they laid out dried food to attract the animals they filmed to study their various behaviors, spokesman Chris Mullord said.
"The aim is to avoid collisions with horses and deer for example," he told the BBC. "But there's no firm release date yet."
The cyclists avoidance system will add at least $2,700 to the cost of a Volvo as part of a package of optional features, the company said.