Jaguar thinks smaller and sportier with new 2017 XE

LOS ANGELES (KABC) -- While Jaguar has been known for building larger luxury sedans, their newest model is purposely on the smaller side.

The 2017 XE slots in below the XF model, and had a base price of around $35,000.

Trim and sporty, it's the latest premium sport sedan to take on other premium sport sedans, including the standard bearer in the segment, the BMW 3-series.

"The 3-series has been the benchmark for a long time, and there's a reason it's the benchmark. So going up against rivals like that, it's really going to be a struggle," said Matt Degen, senior associate editor at Irvine-based Kelley Blue Book.

Part of that struggle is to prove to buyers that it can not only play in Jaguar's comfort zone of the luxury world, but in the sporting world too, with a car that isn't afraid of a race track.

The XE is a far cry from Jaguar's previous effort at a small sport sedan, the Ford-derived X-type which debuted as a 2002 model when Ford owned Jaguar.

That car, based on a medium-priced European Ford Mondeo, never quite measured up to the competition.

"That was really a tough sell for them. This (XE) going forward, it's really got a lot of the elements that somebody looking for this car would want," Degen noted.

For example, it features a rear-wheel drive chassis, which a lot of sport sedan buyers want, even if they perhaps don't know why.

Driving enthusiasts tend to prefer rear-wheel drive for its better handling balance. The XE is also available with all-wheel drive.

Upscale car buyers also tend to want luxury and style, which Jaguars have always been able to deliver.

"I had one a few weeks ago, I was driving it around all weekend," Degen said. "And it's not just the interior, but really the exterior. People were stopping me and saying 'What is that?'"

The biggest challenge for the XE is competition. There's lots of it, and not just in the form of sedans from other brands.

Many luxury buyers are passing on sedans for SUVs. Jaguar has one of those in the F-pace, also new this year.

That new Jaguar SUV is already beating the XE on the sales charts.

"When they launched these vehicles at the same time, the entry level crossover was already outselling the entry level sedan," Degen said.

The Jaguar XE has a lot going for it, but it's also got its work cut out for it. It's up against premium sport sedans from far and wide, not to mention the F-pace model from right in its own showroom.