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When the XE was launched back in 2015 it was huge news. A car that has already proved popular with both company car drivers and retail buyers alike, Jaguar has finally got round to adding AWD capabilities to the BMW 3-series rival's line-up with the aim to broaden its appeal even further.
Powerful diesel engine
For company car drivers, the default engine choice is the lower-powered 160hp 2.0-litre diesel. However, it's only this 180hp version that is available with AWD in the XE line-up.
That's no bad thing - offering a good mix of performance and economy, the 430Nm of torque enables the car to climb from 0-62mph in 7.9 seconds onto a top speed of 140mph, while CO2 emissions of 123g/km means a 24% BIK tax band for the current 2016/17 tax year.
It's a powerful and refined unit that cruises excellently on the motorway. Mated to the engine is the firm's slick eight-speed automatic gearbox, and the two work harmoniously together creating seamless gear changes.
Handling-wise, the XE lacks the pizzazz of the 3-series, but it's still impressively poised in the corners. The intelligent AWD system only diverts power to the front wheels when traction is needed, so unless you live in the Scottish Highlands most of the driving will be done in rear-wheel drive, meaning less of an impact on overall driver engagement.
Comfort levels impress too, although the larger 19-inch alloys on our test car firm things up a bit, while the steering is light and responsive, making easy work of town driving.
Sitting in the middle of the XE five-trim line-up is R-Sport, which comes with a host of equipment as standard including an eight-inch touchscreen system, cruise control, two-zone climate control, parking sensors and leather sports seats.
Interior quality is perhaps not quite up to Audi standards, but overall fit and finish is still excellent. The infotainment system is also one of the best in the sector, proving intuitive to use with crystal-clear resolution from the eight-inch touchscreen.
The XE's 455-litre boot is smaller than most of its rivals but still offers enough space for the weekly shop or a couple of suitcases. Inside is spacious too, with enough room for four adults to travel in comfort, plus there are plenty of options around the cabin to store your personal belongings.
How does it compare?
Opting for all-wheel drive does have an impact on running costs - the two-wheel drive version of the same car achieves 67mpg combined and emits 12g/km less CO2.
When you compare our test car to AWD versions of its rivals, the XE is competitive rather than class-leading. On the residual values front, though, it leads the pack with an impressive 39% of its value retained after three years and 60,000 miles. Its higher price tag prevents the XE from beating comparable BMW 3-series and Audi A4 models in the whole-life costs battle, however, with a 71.9 pence-per-mile figure verses 69.7p and 69.9p, respectively.
Model price range: £26,990-£44,995
Residual value: 39.1%
Service, maintenance and repair: £2,634
Vehicle Excise Duty: £220
National insurance: £3,931
Cost per mile: 71.9p
Fuel consumption: 60.6mpg
CO2 (BIK band): 123g/km (24%)
BIK 20/40% per month: £146/£292
Warranty: 3yrs/unlimited miles
Boot space: 455 litres
Engine size/power: 1,999cc/180hp
Luxurious, comfortable and excellent on the motorway. However, the added peace of mind from AWD brings a compromise on running costs that some will not be able to justify