The XE was launched in 2015 and it’s one of the most important cars for Jaguar in a while since it marked the brand’s return to the compact executive car market.

Prior the XE’s arrival, Jaguar had been out of this particular market for five years, having ultimately struggled for sales with its previous effort, the X-Type saloon. To make sure it fared better this time, Jaguar developed an all-new platform and chassis from the ground-up, plus new engine technology, and all of this debuted on the XE before any other car.

Those are the sort of lengths Jaguar felt it had to go to in order to compete with its rivals. When direct rivals include heavy hitters like the BMW 3 Series, Audi A4 and Mercedes C-Class, it’s understandable.

The Jaguar XE utilises rear-wheel drive as standard but, since the start of 2016, the saloon has also become available with all-wheel drive (AWD) technology, to strengthen the car’s appeal next to its German rivals. In fact, every XE trim apart from the range-topping S offers a specification that utilises all-wheel drive. The R-Sport, which adds some distinct, sporty styling touches to the XE, is among the trims to offer AWD.

So how does the XE stack up next to its rivals and how much does all-wheel drive enhance the experience?

Performance

If you want the Jaguar XE with all-wheel drive, then you’ll have to use one particular engine and gearbox combo from the saloon’s range. Jaguar XE AWD models use a 178bhp 2.0-litre Ingenium diesel engine combined with an eight-speed automatic gearbox.

This lack of variation is not much of a concern when you realise this particular diesel is one of the stronger additions to the XE range, propelling the saloon from zero to 62mph in just 7.5 seconds. That sprint time is quicker than the rear-wheel drive version, albeit by just 0.3 seconds. This level of performance is also about on par with XE rivals using a similar diesel engine and all-wheel drive.

Still, there’s no doubt the XE does feel brisk thanks to the very slick gear changes from the auto gearbox and the substantial torque which kicks in with little effort required.

Ride and Handling

The XE is fantastically composed through the corners, offering plentiful grip and beautiful body control constantly.

Jaguar spent a vast amount of time on its mostly aluminium chassis to ensure it could deliver a drive that can meet the high standards set by other compact executive cars, particularly the BMW 3 Series. The company’s efforts have paid off handsomely, to the benefit of drivers and other passengers. The XE is fantastically composed through the corners, offering plentiful grip and beautiful body control constantly. Steering is nicely weighted, particularly if you put in the dynamic setting instead of just normal mode. The R-Sport model adds larger wheels and sportier suspension to the XE, which does firm up the ride, but the car still does a decent job reacting to undulations on the road. All of this could still be said if you opt for rear-wheel drive on your XE. With all-wheel drive, you’re most likely to feel its benefits if you want to exit a tight corner quickly, otherwise the driving experience is very similar without it. With or without all-wheel drive, the XE is one of the best compact executive cars to drive and feels like a genuine match to the lofty standards set by the 3 Series.

Interior and Equipment

The XE’s traction control is based heavily on the Terrain Response system used in Land Rover SUVs.

While the Jaguar XE is a strong match for its main rivals in certain areas, it does sadly lag behind in terms of passenger space. There’s not much legroom or headroom at the back, so if you want to accommodate four tall adults they’ll probably only tolerate short journeys. This issue is compounded further with the R-Sport trim because its sports seats take up more space. Boot capacity for the XE is 455 litres – good enough to fit a couple of suitcases but noticeably behind main rivals. The 3 Series, A4 and C-Class all offer 480 litres at the back as standard. On a more positive note, the XE R-Sport has a tidily laid out interior full of high quality materials that’s also pleasing on the eye. It also comes well equipped, featuring various luxuries you’d hope for such as climate control, cruise control, heated mirrors, parking sensors and sat-nav. The seats in R-Sport models are heated and come in a neat leather trim.

Cost

To have all-wheel drive instead of the rear-wheel drive equivalent, you need to spend nearly two grand extra for the privilege.

While the XE range starts at just under £27,000, you’ll have to spend at least nearly £34,000 to get the saloon with all-wheel drive. That is a similar figure to other current executive saloons with all-wheel drive, but the model we tested comes in at £36,575. To have all-wheel drive instead of the rear-wheel drive equivalent, you need to spend nearly two grand extra for the privilege, which sounds steep for something which has a barely noticeable effect on dry roads. CO2 emissions for this XE AWD model are at 123g/km and combined fuel economy is averaged at 60.6mpg. The equivalent rear-wheel drive model obviously fairs better though, averaging 67.3mpg and emitting 109g/km.

Our Verdict

The Jaguar is certainly a credible rival to the German compact executive saloons out there, offering attractive styling, an enjoyable drive and a strong engine line-up with decent diesels. It could have potentially become the undisputed class leader if it was more spacious at the rear, but instead it undeniably lags in this area. How much importance you place on practicality will likely determine whether the XE is worth going for instead of the German alternatives. With the AWD powertrain, the XE is great to drive, but this was already a strong point when the car was offered with just rear-wheel drive to begin with. So unless you expect to do most of your driving on tricky roads during the winter, it makes sense to just stick with rear-wheel drive. But if you’re determined to get a four-wheel drive compact saloon, then the XE AWD is one of the best to drive in its class.