Can the XE finally establish Jaguar in the hottest sector of the premium car market? Ray Hutton considers the issues.

I had worried about the Jaguar XE. A small group of journalists were given the opportunity to drive pre-production cars a couple of months ahead of the sales launch. I was not among them but I know and respect some of those involved and, reading between the lines of their reports, I concluded: dynamics and road behaviour up to Jaguar’s high standards; new diesel engine unimpressive and not as refined as the competition’s.

Letting outsiders critique unfinished cars is a risky business. In my experience, if there is something mechanical below par on a pre-production car, it will be the same in the final version. The manufacturer always says that any issues will be fixed before cars reach the showrooms but they rarely are: usually, it is simply too late to make any significant changes. We can make allowances for things like ill-fitting or wrongly textured trim, as these may not be from production tooling, but in most cases, the way it goes, sounds, and drives is the way it is going to be.

Having now driven the definitive product, I am pleased to say that, this time, Jaguar seems to be the exception. My feeling, confirmed by the test reports published so far, is that the all-new XE, and its all-new Ingenium diesel engine, meet all the maker’s targets and that it is a worthy rival for the German premium trio of BMW 3-series, Mercedes C-class and Audi A4.

Those launch reports came as a great relief to Jaguar Land Rover, which has now decided not to allow access to pre-production models in future programmes. But for the XE it was desperate to keep the momentum going, following the GBP3m launch event last September. Then, projecting the rather corny ‘FeelXE’ slogan, it made an all-out lunge for the youth market, with Emile Sandé performing a specially-written song on a barge on the Thames in the centre of London and a James Bond style-dash down the river with the car on the deck of a high-speed powerboat. The message was: ‘This is not your father’s Jaguar’.

JLR is acutely aware of the reaction to the X-Type, its venture into the compact saloon market in the Ford era. Conventional wisdom is that the X-Type was not a success because it was perceived as a Ford Mondeo in Jaguar clothes. But evidence from competitors – like the best-selling Audi A3 being a restyled VW Golf – suggests that most buyers have little concern for the source of the engine and driveline. The real problem for the X-Type was its traditional styling, from which even Jaguar devotees were turning away, and launching with 2.5 and 3 litre V6 petrol engines when the market was moving to four-cylinder diesels.

This time, Jaguar meets its rivals head-on, with a rear-wheel drive saloon the same size as the BMW 3-series and Audi A4 and the emphasis for European markets on the 2-litre diesel engine. Although its designers insist that the XE makes an individual statement, there is even a similarity in style with the best-selling Germans. And, of course, it had to match them on price.

So the fundamentals are there. Although there is something of a risk in launching a new car with a new engine, from two new factories, we can hope that the XE proves reliable and avoids the kind of teething problems of Jaguars of old. It now comes down to consumer choice. Even with five-star reviews, it remains to be seen whether the thrusting young business-men and -women will be tempted away from their BMWs and Audis.

JLR is in a classic bind: to reduce its fleet average fuel consumption and CO2, it has chosen to make the XE underbody in aluminium which means that it starts out being more expensive to build than its competitors – which already benefit from the economies of higher sales volumes. The 3-series is BMW’s core product and its annual production is higher than JLR’s total output of Jaguars and Land Rovers.

Other premium contenders seek to reduce costs by sharing components – Lexus with its parent Toyota, and Infiniti, increasingly, with Mercedes through its cooperation with the Renault-Nissan alliance. So far, JLR has eschewed partnerships and gone solo, following the BMW business model. It plans to achieve its economies of scale by using the XE architecture – described as ‘aluminium intensive’ because it includes some steel body panels – for a wide range of future Jaguars and Land Rovers.

The next model will be the new Jaguar XF, on sale from September. Under the skin, that is simply an XE with a longer wheelbase. JLR previewed the XF at the New York Auto Show and in a high-wire stunt crossing the Thames, to clarify the relationship between the two models, which is just like the 3- and 5-series at BMW.

The F-Pace SUV/crossover, based on the CX-17 concept car, is the equivalent of the BMW X3. It also uses the same architecture, along with a four-wheel drive system that will be available for the XE and XF. F-Pace will be shown in production form at the Frankfurt Motor Show in September and go on sale in the first quarter of 2016.

A Range Rover sized between the Evoque and Range Rover Sport will be a further use of this technology. All of these cars will use the Ingenium engines, which will be available as a petrol version from early next year.

This ambitious programme, which will amount to an investment of over GBP2bn, spreads the costs – and the risks. The thinking is that if the XE doesn’t take off, perhaps because of the continuing shift towards premium SUVs, the F-Pace will be there as an attractive alternative. Either way, Jaguar should be able to achieve its short-to-medium term aim of 200,000 cars a year, up from 81,570 last year.

If that sounds like a familiar target, it is. In 1989, when Ford acquired Jaguar, we were told that it would develop competitors for the 3- and 5-series, with the aim of building up production from 50,000 to 200,000. Those cars – the X-Type and S-Type – took a long time to appear and, when they did, perpetuated the Jaguar image of traditional cars for older people. Jaguar was then subsumed in Ford’s Premier Automotive Group and the volume targets for the individual marques became less important. By the time of the Tata takeover in 2008, Jaguar sales were down to 60,000 and when the X-Type was withdrawn in 2009 they dropped to 51,000.

It is sometimes said that the integration of Jaguar and Land Rover means that it isn’t essential for Jaguar to make a lot of cars or profit, because Land Rover does so well. But neither JLR nor Jaguar dealers see it that way. They proclaim the XE as the start of Jaguar’s renaissance, a new way for new customers: Not your father’s Jaguar.

See also: ANALYSIS: Jaguar’s XE spearheads new industrial strategy