Jaguar pounces on compact sport sedans with all-new XE

Jaguar pounced into the high-stakes world of compact sedans Monday with the introduction of its 2016 XE, an all-new model that bets heavily on lightweight aluminum.

When the sleek four-door sedan goes on sale in the U.S. in 2016, it will look to steal sales from entrenched competitors like the BMW 3 Series, Mercedes-Benz C-Class, and Lexus IS. It’s the first time Jaguar has competed in the largest luxury segment in the U.S. since 2007.

“We know this is a great segment to be in,” said Jeff Curry, vice president of Jaguar North America. “Jaguar is coming in as a challenger brand. We’re not doing another [BMW] 3 Series, and that’s why we feel so excited that this car truly starts from a clean sheet of paper.”

The 2016 Jaguar XE announced Monday is the top-end S model and comes with a 340-horsepower, supercharged V-6 engine, an eight-speed automatic transmission and rear-wheel-drive.

An XE with at least one all-new turbocharged, four-cylinder engine is expected to be announced in the coming months, and Jaguar said the sedan also has “the capability of accepting all-wheel-drive.”

Pricing hasn’t been announced for any of the XE models, but most of the cars Jaguar is targeting in the compact luxury sport sedan market sell for between $35,000 and $55,000.

“It’s hugely important for Jaguar to expand its lineup and compete across a wider span of the luxury segment,” said Alec Gutierrez, a senior analyst at kbb.com. “If anyone is going to get out there and change the landscape of this segment and really push the other guys, Jaguar is the one to do it.”

Jaguar is in the middle of an aggressive makeover that has reinvigorated a staid brand with the swagger and sex appeal it was known for decades ago (the sultry F-Type coupe and convertible bear this out).

Sales were up 41% in 2013, though they’re down slightly for 2014. Despite last year’s growth, Jaguar sells only a small fraction of the number of vehicles that Mercedes or BMW sell in the U.S. each year.

Moving into the compact car segment is essential for Jaguar to boost sales and profits. Small sports sedans are the largest luxury segment in the U.S., selling around 670,000 units in 2013, according to kbb.com’s data.

Higher volume models like the XE and an unnamed compact crossover due in 2016 will help Jaguar become a more approachable brand with a lower entry price point than it currently has. Automakers relish the idea of using entry-level models to pull in first-time buyers who, they hope, will then stay with the brand as their tastes and bank accounts mature.

“The XE is a natural extension for Jaguar and a way to really open up the brand to the next generation of buyers,” Gutierrez said.

The automaker could easily sell between 20,000 and 30,000 XE sedans a year, giving it a huge boost over the nearly 17,000 cars it sold in 2013, Gutierrez said.

The XE’s lightweight aluminum body structure will be one of the key factors that helps it stand out in a crowded and cutthroat group of competitors. The XE S weighs 3,250 pounds, Jaguar said, which is at least 350 pounds lighter than comparable V-6 versions of the BMW, Mercedes or Lexus.

“Increasingly within the auto industry, people are waking up to the fact that aluminum is a great material to build great volume vehicles out of,” Curry said.

He pointed out that Ford’s upcoming F-150 will be the highest-volume vehicle yet to rely on an aluminum body to cut down on weight and improve efficiency. And recent versions of several Range Rover models -- built by Jaguar’s corporate cousin Land Rover -- have also shaved more than 700 pounds by using aluminum.

Because the XE will likely be Jaguar’s best-selling car and its most efficient, the automaker’s overall average fuel economy gets help with fuel regulations around the globe. A lighter curb weight will also help make the sedan more nimble and responsive, an essential trait in the compact sport sedan segment.

Jaguar last played in this segment between 2002 and 2007, with the X-Type sedan and station wagon. Ford owned Jaguar at the time and built the X-Type on a platform used on lesser models like the Ford Mondeo and Contour.

Jaguar maintains that the car was a success, selling as many as 75,000 copies a year globally. But the X-Type was plagued by reliability issues and poor build quality compared with other brands.

The Indian company Tata Motors bought Jaguar from Ford in 2008. Designers started with a clean sheet of paper when they set out to build the new XE.

“In the past, our company never had a blank slate,” Curry said. “We had an awful lot filled in that you had to work around. This really is a no-compromises approach.”

The styling of the XE will look familiar to fans of Jaguar’s midsize XF sedan. Low-slung headlights give the face a scowl, while the long hood and short trunk lid lend it a coupe-like profile. Overall, Jaguar played it more conservative with the XE than some of its competitors.

“We don’t make cars that date too quickly,” Curry said. “This is not a Lexus IS with very aggressive details on it. Our car will have a more timeless look.”

Despite room in the luxury compact sedan segment for a new and unique player like Jaguar, the XE isn’t a guaranteed success. If the demand isn’t up to Jaguar’s expectations and the automaker is forced to use heavy incentives to sell the XE, it could hurt the automaker for years.

“Any time you go toe to toe with BMW’s 3 Series, there’s a ton of risk,” Gutierrez said. “But based on what I’m seeing, they’ve got what it takes.”