Good: stylish, good to drive, great powertrain

Not so good: R-Sport model not cheap, rear seat space only acceptable

If you're in any doubt that Jaguar has the BMW 3 Series is its sights with the new XE saloon then take a few moments to compare the specifications of this car with the accomplished BMW 320d's. As we're looking at the sportier R-Sport car here, fitted with the excellent eight-speed automatic, let's take the 320d M Sport Auto by way of comparison.

So, both are powered by 2.0-litre four-cylinder turbodiesel engines. The Jaguar's, a brand new unit in Jaguar Land Rover's 'Ingenium' family, is quieter and smoother, but there's not much in it in terms of output. The BMW 320d's engine produces 190hp and 400Nm of torque, while the XE's makes 180hp and 430Nm (there is a 163hp version of the XE's engine too, with 380Nm of torque). They're within 10kg of each other depending on options so there's little between the cars in terms of performance - with the BMW officially winning the sprint to 100km/h (by 0.2 seconds) and hitting a higher top speed on the autobahn - by 10km/h.

Of more interest to more buyers will be the efficiency figures and that's where the Jaguar sneaks ahead. Its emissions output is 5g/km lower than that of the BMW, which makes no difference to annual road tax, but it indicates that the Jaguar uses less fuel. The official combined consumption figure for the 320d is 61mpg (4.6 litres/100km) and in everyday driving, there's not much between the two cars at all.

However, there's another figure we've not mentioned yet that the Jaguar beats the BMW on, and that's price. This XE R-Sport, with the automatic gearbox and higher-power engine reviewed here, costs €46,310, while the comparable 320d is €48,667. That's a big chunk of change. Indeed, the XE has a price advantage across the line-up, with a starting price of €37,995 for the 163hp 2.0-litre diesel model. The cheapest diesel BMW 3 Series (the just facelifted one) is a tenner under 40 grand - for a 143hp engine.

Jaguar Ireland doesn't offer quite so many variants of the XE as BMW does of the 3 Series, but in fairness consumer demand is quite focused in the segment so we reckon the bases are well covered. The 2.0-litre diesel engine can be had in 163- or 180hp guises, with a six-speed manual or eight-speed automatic transmission. Emissions are as low as 99g/km for the former or 106g/km for the latter. Trim levels are SE, Prestige (likely to be the biggest seller), R-Sport pictured here and the all-singing, all-dancing Portfolio version.

All XEs come as a minimum with electric windows all-round, climate control, Jaguar's new eight-inch touchscreen infotainment system called InControl, Bluetooth, keyless entry and start, 17-inch alloy wheels, cruise control with speed limiter, a leather steering wheel and plenty of active and passive safety equipment, including Lane Departure Warning, Autonomous Emergency Braking with Forward Facing Camera and Pedestrian Contact Sensing - Deployable Bonnet. The R-Sport car adds a sporty (but not inelegant) body kit including boot spoiler, sports seats with unique upholstery and other detail changes inside and out to give the XE a distinct appearance. It's the one to go for we think.

No matter which you opt for, it's remarkable just how similar to the 3 Series the XE feels on the road. It's at least as good at soaking up poor road surfaces, even on larger wheels, it's refined and, given a more challenging sequence of corners, really fun to drive. The rear-drive layout gives it great balance and agility, plus it leaves the front wheels free to focus on steering. It's an electronically controlled power assistance system as is the norm nowadays, and it's linear and direct enough to add to the experience rather than distract from it. This is certainly a car you'd take for a drive just for the sake of it. As you would the 3 Series. The Jaguar has one final ace up its sleeve though, one you'll have noticed already - it looks far more interesting. Jaguar Ireland reckons it'll sell 300 XEs this year - or about 10 per cent of the segment. We think Jaguar needs to up its expectations.