Certain motoring journalism celebrities still bemoan the day that Jaguar became one of the last luxury saloon car makers to fit diesel engines. Let's face it; this was an inevitable move to compete in a market in which more than half the cars sold are now diesel-powered. Put bluntly, either we get used to the idea of diesel Jaguars or we stand by and witness the demise of one of the great automotive marques.

The future really was looking bleak for the leaping cat; its rivals were selling diesel models by the shipload, while parent Ford's well-publicised financial difficulty reduced the chance of Jaguar being kept afloat on name alone; Jaguar must make a profit. Thankfully, Ford had a proven new-generation common rail diesel engine in production, which could easily slot under the sculpted bonnet of the Mondeo-based X-type. The result (Jaguar's first ever diesel car) is reviewed here: the X-type 2.0-litre Classic Diesel.

By now you should be accustomed to the Jaguar X-type shape; it has been largely unchanged since its 2001 launch. Though plainly a Jaguar, the X-type saloon lacks the grace and elegance of its bigger brothers, whilst retaining traditional styling touches. The new Estate is a much more coherent design. Our sources tell us that Jaguar has big plans for the next generation though – take a long hard look at the radical Jaguar R-D6 concept car (revealed at the 2003 Frankfurt Motor Show) for clues. The design department will not be constrained to the floorpan of the Ford Mondeo next time around either.

Back in the here and now, I'm afraid that the design of the X-type interior is no better. Don't get me wrong, the cabin is of good quality and well specified, but the number of buyers interested in cream leather and shiny wood must be dwindling faster than the number of WW2 survivors from the kamikaze regiment. Thankfully, you can specify other colours and finishes, which is just as well; I wonder can you make out the colour of the steering wheel and the top of the dashboard? If I were being kind I would call it cappuccino (though the kind you might expect from a dodgy diner in Blackpool, in the early '80s...). It doesn't help that the spokes of the steering wheel are made from a plastic not at all befitting of a Jaguar.

Criticisms aside, the interior is actually a nice place to be. The seats are comfortable over long journeys and quite adjustable, though one of our testers commented that it lacked under-thigh support. The instruments and switchgear are clear and well positioned. Interior design touches, such as the centre console surround and the door cappings, are shared with the S-type and XJ. Most surfaces are pleasant to the touch, though the heater controls would be more tactile ideally.

Perhaps more importantly, the outside world is kept at bay by the X-type's excellent cabin insulation. The same silent ambience as any big Jaguar exists once the heavy doors are closed. The diesel engine's characteristic noise is audible at idle if you are not speaking and the radio is turned off, but either of those things drown it out, and there is no vibrations through to the cockpit. On the move, the engine note is never intrusive, and rarely heard at all.

At a cruise, the X-type Diesel excels. Indeed, this X-type is one of the best cruisers we've had the privilege of driving. Once onto the motorway, slot into fifth and save for traffic jams, you should not need to change gear again until you reach your destination. With such a wide and flat torque curve, any speed between 50 and 100 mph is available to you in a matter of seconds, with serious urge on tap once the turbo is spooled up just below 2000 rpm. We've come to expect decent performance from the latest generation of common-rail, turbocharged diesels. A 0-60 mph time of only 9.5 seconds for this Jaguar is an impressive feat in itself, but in-gear acceleration is where the X-type Diesel really shows its stuff. Along with pace to keep ahead of most motorway traffic, the X-type rides amazingly well. It soaks up every imperfection before it has a chance to bother the occupants.

The downside of such an incredible ride is of course the car's roadholding. In comparison to BMW's 3-series, it rolls a hell of a lot more, and has substantially less grip. The BMW aims for the apex decisively, where as with the X-type I turned in Monday last week and am hoping for it to happen any day now... Admittedly, the X-type's ride is a league above the BMW's, and if you want to sacrifice this for sportier handling then you can just pay a little extra for the Sport version of the X-type. Though its limits are low, the X-type can be hustled. Communication is good and the chassis is adjustable with the throttle. We have driven the four-wheel drive petrol versions, and it really is a good platform, though all-wheel drive would be wasted in this application, and would worsen the fuel economy.

Ah yes, one of the primary reasons for the resurgence of the diesel engine – fuel economy, or more specifically in the UK, CO₂ emissions. Jaguar claims up to 62.1 mpg on the Extra Urban cycle, with even 37.9 mpg on the tough Urban Cycle. You should manage between 40 and 50 mpg on average without too much restraint, and the low 149 g/km CO₂ figure will keep the company car tax bill down too.

While we had the X-type, a friend asked about its standard equipment in comparison to say a Skoda Superb. He pointed out that the Skoda was better value for money. That may be so, but we think he is missing the point. Will the same person interested in a value for money diesel really be interested in the cachet of owning a Jaguar? I think a more realistic comparison is to be had with BMW, Mercedes, Audi and perhaps Alfa Romeo. The BMW 318d is very close to the X-type in terms of performance and fuel economy, but loses out on price. Hidden quietly in the BMW range though is the conspicuously good value 318dES, which is cheaper than the basic 318d at £19,995, yet better equipped. Think of it as a rival for the Sport version of the X-type though as it has sports suspension as standard.

Mercedes' C-class diesel models are all more expensive than the Jaguar, and don't offer better performance or economy. Audi has one A4 diesel model which is a fraction cheaper than the X-type, but it loses out in terms of performance and CO₂ emissions, though is arguably a cooler choice. Another car worth considering is Alfa Romeo's recently facelifted 156, which could be had with the excellent 16-valve version of the JTD engine for less than £19,000.

It is worth noting that each of the competitors mentioned here have had diesel models for quite some time, and it has never hurt the image of the marque. Jaguar has not only done the right thing, it has done the thing right.