By Jim Meachen and Ted Biederman

Jaguar's last attempt at a small luxury sedan was not a successful one. The forgettable 2002-2008 Jaguar X-Type, built under Ford's ownership on a second-generation European Ford platform, felt more like a gussied up Ford than an entry-level Jaguar. Granted, Ford had improved the brand's reliability by that time, but was sacrificing exclusiveness for increased sales.

Now revitalized with new, stylish products, Tata-owned Jaguar has decided to re-enter the small sports sedan market with the all-new XE with rear-wheel or all-wheel drive. This time out, Jaguar has hit a home run with an all-new vehicle architecture that uses a large amount of aluminum for reduced weight. It brings stirring performance with a 340-horsepower supercharged V-6 — or exceptional mileage with a 2.0-liter turbo-four-cylinder diesel engine option — and handsome Jaguar design language.

The new XE is a legitimate alternative to German sedans from BMW, Mercedes and Audi such as the 3-Series, C-Class and A4.

Inside, the XE offers a quiet, luxurious environment for four adults stretching out 183.9 inches with a wheelbase of 111.9 inches — about the same size as the Audi and BMW. Jaguar has got the cockpit just right with the signature Jaguar rotary gear selector that rises out of the center console when the car is turned on, an available user-friendly 10.2-inch touchscreen, and physical speedometer and tachometer gauges flanking a multifunction LCD screen.

At the same time we found to our delight very comfortable front seats that offer an excellent driving position with controls that fall right to hand, and our rear seat passengers had no complaints. Trunk space is generous measured at 15.9 cubic feet.

Regardless of how many superlatives we throw at the interior experience, the thing that matters most in a small luxury sports sedan is the drive. Without first-class power and impeccable handling all else would be superfluous. We found the new XE answers the call with a superb driving experience. We lived with both the supercharged V-6 for about 500 miles including driving in the higher altitudes of Colorado and found performance from the 340-horsepower V-6 — that churns out 332 pound-feet of torque — mated to an eight-speed automatic, to be everything we would desire in a compact 40-to-50 grand sedan.

The V-6 with all-wheel drive is capable of 0-to-60 runs in about 4.5 seconds and quarter-mile times of 13.1 seconds at 106 mph. At the same time, we found the Jaguar to be composed in hard cornering on mountain road twists and turns when outfitted with Adaptive Dynamics suspension found on the two top trim levels — Prestige and R-Sport. It gives the car a precision feel.

We also drove the four-cylinder diesel and found it virtually devoid of any of the diesel clatter once associated with oil burners. The engine offers a solid driving experience, and provides enough punch to handle all the usual driving chores. For comparison purposes, it has been clocked from 0-to-60 in 7.4 seconds. The thing here is that you get the style and all the luxury the XE has to offer together with exemplary fuel mileage of 32 mpg city, 42-highway and 36 overall. Also offered is a turbocharged 2.0-liter four-cylinder making 240 horsepower and 251 pound-feet of torque. All-wheel drive for $2,500 is available on the V-6 and diesel, but not on the 2.0-liter gas engine.

Standard safety is a bit disappointing, however, for a car in this price range. Standard are the usual items found on virtually all cars regardless of price including stability and traction control. You have to move to Premium trim to get a rearview camera. And to get blind-spot monitoring and rear-traffic alert — features we think all cars regardless of price should have — you will have to add a $2,400 Vision Package. To get adaptive cruise control and a surround camera system you will have to opt for the top-line R-Sport and then fork over $3,200 for a Drive Assistance Package.

The XE comes in four trim levels — base, Premium, Prestige and R-Sport — and with a three engine options and a variety of configurations starting at $35,895 for the 2.0-liter turbocharged engine with rear-wheel drive. All models have three selectable drive modes — Normal, Eco and Dynamic — auto stop/start, an electronic parking brake, remote keyless entry with push-button start, dual-zone automatic climate control, eight-way power front seats, a leather-wrapped steering wheel, and Bluetooth.

The diesel engine XE begins at $37,395 and the supercharged V-6 starts at $42,695. The XE tops out at $52,695 for the R-Sport V-6 with all-wheel drive. Our V-6 AWD Prestige trim test car carried a bottom line of $49,095.

Essentials
Base price: $35,895; as driven, $49,095
Engine: 3.0-liter supercharged V-6
Horsepower: 340 @ 6,500 rpm
Torque: 332 foot-pounds @ 4,500 rpm
Transmission: 8-speed automatic
Drive: all-wheel
Seating: 2/3
Wheelbase: 111.6 inches
Length: 183.9 inches
Curb weight: 3,795 pounds
Turning circle: 38.4 feet
Luggage capacity: 15.9 cubic feet
Fuel capacity: 16.6 gallons (premium)
EPA rating: 20 city, 29 highway, 23 combined
Also consider: BMW 3-Series, Cadillac ATS, Audi A4

The Good
• Thrilling acceleration with V-6
• Three engine choices
• Sharp, lively handling
• Easy-to-use touchscreen

The Bad
• Rear seating can be tight

The Ugly
• Many safety features optional