THE Germans have dominated the compact executive class for as long as I can remember but now Jaguar has launched a car to challenge their might.

At last the Audi A4, Mercedes C-Class and the BMW 3 Series have real competition in the shape of the XE - a saloon that blends stunning looks with comfort, performance and economy.

Widely regarded as the most important car in Jaguar's history - the XE has been designed to take Jaguar to the next sales level and make it less of a niche player.

The investment made to get the XE to market was huge and the result is a car that matches or betters its rivals in just about everything.

Designed by design director Scotsman Ian Callum and his team of talented designers, the XE has all the necessary credentials to make a serious challenge.

I have been sampling the XE R-Sport 2.0-litre diesel with the 163ps engine which has an on the road price of £34,075.

Based on a brand new aluminium chassis, with diesel power from a new engine called ‘Ingenium' - designed from scratch by Jaguar - the XE may be an entry-level model but it still demonstrates all that is best about the marque.

The 1,999cc four cylinder Ingenium diesel combined with an eight-speed automatic gearbox has emissions of just 106g/km - making it a very attractive proposition for company car drivers.

If you select the manual version emissions drop to 99g/km reducing the tax bill further but in this class the automatic is the car to have.

Good for 62mph in 8.2 seconds the top speed is 132mph. The more powerful version of this engine produces 178bhp and is slightly quicker but it jumps up a tax band.

Petrol engines are also available including a3.0-litre supercharged V6 with 335bhp and performance to match.

The interior of the XE is all you would expect from a Jaguar and all models offer stacks of standard equipment. Four adults can travel in real comfort and five can be carried for shorter journeys. Leg room in the rear is a bit tight but no different from its main rivals.

Build quality equals the best and as a result the cabin is a very nice place to be. There is plenty of tech included with the XE featuring Jaguar's latest InControl Touch infotainment system with Apple and Android smartphone connectivity.

Standard features also include sat-nav, cruise control, alloys, a DAB radio and climate control. The R-Sport also features a neat bodykit, sports suspension, intelligent stop/start and a host of safety features.

Spend an extra £500 and you get a superb Meridian sound system, £1,000 will buy you a panoramic sliding sunroof and £800 will get you heated/cooled front and rear seats.

The new XE is a pleasure to drive as it is really agile and the steering is superb. The ride is not too firm and the suspension handles all types of surfaces with ease.

As a bonus this diesel is very frugal with a claimed combined figure of 68.9mpg. Don't expect that in real conditions but owners will have no trouble in averaging over 50mpg without trying too hard.