WHEN is a Jaguar no longer a Jaguar? Five years ago, if you wanted a Jaguar the choice was a luxury XJ limousine or a luxury XK coupé. They were beautiful designs powered by high-output eight-cylinder engines directing their power to the rear wheels, which meant that even the cheapest Jag was fast, aristocratic and, for most, unaffordable.

Fast forward to the present and while these cars or their successors remain, the Jaguar I’ve just been driving is rather ugly, has four cylinders, diesel power, front-wheel drive, uses the same platform as a Mondeo and is slower and cheaper than certain Skodas I could mention.

Welcome, then, the Jaguar X-type 2.0D, the company’s first diesel car and its first for longer than anyone would care to remember to be fitted with a four-cylinder engine.

Before I drove it I struggled with the concept of this car. Jaguar needs diesel cars desperately yet the very concept of a diesel Jaguar seemed strange. More worrying was the fact that its engine would be the disappointingly rattly and unrefined unit found in the Mondeo TDCi.

But then I drove it. Its refinement is pretty impressive by any diesel standards but for a four-cylinder Mondeo-derived engine it is frankly astonishing. The equivalent BMW engine offers more power and better fuel consumption but for smooth, silent sophistication my ears say this Jag has even the BMW licked.

However, the engine does not comply with the forthcoming Euro IV emissions standard, meaning that until it does — and Jaguar is unable to say when that will be — the 3% company car tax surcharge will remain applicable. This means the benefit in kind is assessed on 18% of its £19,995 list price rather than the 15% enjoyed by Euro IV-compliant engines.

And of course there is the X-factor. The X-type never was and still is not a great car. Were such awesomely capable and attractive rivals such as the Audi A4 and BMW 3-series not available perhaps I’d not notice the X-type’s limitations so much, but it was Jaguar’s choice to walk onto one of the bloodiest of automotive battlefields. And by my reckoning the X-type is too ugly outside, bland within and dynamically unexceptional to be a serious combatant.

Yet there’s no doubt in my mind that this is the best X-type of all. Ironically, by offering all the mid-range punch modern diesels can deliver without any of the acoustic interference, Jaguar has instilled this X-type with an effortless nature that is very, for want of a better word, Jaguar. The other X-types may be more powerful but none has so much torque and on the open road that is what really counts.

I just wish I could get the spectre of Skoda out of my head. My time with the X-type diesel coincided with time spent in a Skoda Superb 2.5 V6 TDI Comfort, and the truth is that the Superb has six cylinders and gears while the X has just four and five.

Moreover the Skoda is quicker, better looking and massively more spacious. The Jaguar has superior ride, handling, fuel consumption and emissions and costs £410 less. Faced with the choice, and if I did not need the extra space, I’d probably choose the Jaguar, but more for its likely lower depreciation than anything else. However, it’s closer than it should be.

And if I think of the X-type in the context of the Audis, BMWs and Mercedes with which it was designed to compete, I could not recommend it ahead of any of them, though it runs the Mercedes C-class very close.

Some indication of how important this car is to the firm is that Jaguar anticipates that half of all X-types sold in Britain will be diesel powered, a figure that rises to two-thirds in Europe.

I think its true significance, however, will be in the longer term. If Jaguar know-how can turn a harsh and noisy four-cylinder engine from a Mondeo into something worthy of the Jaguar brand, think what its all-new 2.7 litre V6 diesel is going to be like when it finds its way under the bonnet of the S-type later this year.