You’ve heard the stories: Jaguar’s in such a bad state it can’t even sell itself. Over the past few weeks it has been portrayed as a multi-billion-dollar albatross around the neck of Ford, lacking in leadership and ideas, not to mention product tuned to the 21st-century public.

Well here’s another Jaguar story, and for once the news is good. You’ll be reading a lot about this new XKR over the next few weeks so you’d better get used to “best Jag since the E-type” headlines. This doesn’t interest me at all. What does excite me is that within 10 miles at the wheel I suspected this Jaguar was not simply more charming than its rivals from BMW and Mercedes, it was plain better, too. Now, several hundred miles down the road, I’ m convinced. And that is a story worth telling.

With 420bhp from its supercharged V8 motor it is not only 20bhp more powerful than the old XKR, it is also 80kg lighter (100kg if you order the convertible). That’s enough to knock its 0-60mph time below the 5sec mark, where performance moves from fearsome to feral. When I drove the standard 300bhp XK at the beginning of the year it didn’t feel underpowered, but the XKR adds 120bhp to its output. Just as importantly, the XKR has been seriously stiffened to cope with the extra performance.

It turned out to be one of those cars I had the deepest difficulty getting out of. I only had it for three days but still put an impolite number of miles on its clock. Trip to London? That’ll be the Jaguar. Long day in the office and need to clear the head on some mountain roads? XKR keys, please. Got to take the recycling to the tip? What’s wrong with two journeys?

Actually, even I couldn’t quite make sense of taking the XKR to the rubbish dump twice, but in every other environment it provided a near perfect blend of point-to-point efficiency and character, perhaps the two most important traits for any true GT. Most of the time its supercharger is effectively bypassed so the car behaves much as would an XK, but when you demand an instant slug of power, where the XK feels swift and sharp the XKR is little short of savage.

Nor has its long-distance demeanour been spoilt by its stiffer springs and reprogrammed electronic dampers. The ride is firmer than that of the XK, but a hard ride need not mean a harsh ride: if your suspension people know their stuff it can actually improve comfort by giving better control of vertical and lateral movements. This is still a car you could drive all night and emerge from more interested in breakfast than bed.

The XKR shows that whatever the trouble at the top, Jaguar still has enough engineering talent to make up in clear thinking and inspired design what the company lacks in cash. And at least the bits that aren’t so good — the tacked-on rear spoiler, naff “R” logos, telescopic aerial and the quality of some interior fittings — are all cosmetic.

Early indications are that Jaguar is going to struggle to build enough XKRs to meet demand, a sign the brand has not yet been damaged beyond repair. And it has been announced that the XKR will race at international level next year, which should bring tears to the eyes of everyone who can remember Jaguar’s C-type, D-type, XJR9, not to mention the XJ13 on page 4-5. A return to Le Mans is not out of the question.

But we should not get too far ahead of ourselves. Jaguar will make money from its XKs but nothing like enough to staunch the haemorrhage of cash leaking from its less successful models. The future depends on 2008’s successor to the lovely but unloved S-type and a desperately needed radical facelift of the staid-looking XJ saloon. At last week’s Paris Motor Show Jaguar executives were chatting excitedly about these cars and even, in the future, an ultra-sporting Porsche Boxster and Cayman rival — the oft-mooted F-type.

If these cars can be delivered and the X-type ditched, and if they build on the standards seen in the XK and XKR, there’s not only a future out there for Jaguar, it could be a bright one, too.

THE OPPOSITION

Model BMW 650i Sport £54,870
For Affordable by these standards, room in back, handling
Against Odd looks, characterless to drive, and it's got iDrive

Model Mercedes SZL 500 £75,925
For Coupé and a convertible in one, strong engine, looks
Against Two swats only, ageing interior, limited boot space