LIFE in the compact executive sector is tough. Image is everything, but ability is also important, and if a car is going to spend three years doing a job, then running costs cannot be ignored.

Jaguar is a late entrant in this sector where BMW and Mercedes are established and where Audi has made a name for itself with the A4. So now the much-vaunted X-type has hit the road, it has to compete with some highly competent machines with the benefit of German engineering.

So far only five X-types are available - an entry level 2.5 V6 priced at £22,000 on the road, SE and Sport versions of the 2.5, plus a 3.0 V6 in SE and Sport variants. Five-speed automatic transmissions are available as options. Later in the model's life there will be a diesel, and Jaguar has hinted that other body styles will follow - possibly a convertible, coupe and estate. There will also be a high-performance 'R' version.

We chose the range-topping 3.0 SE auto for this test, which retails at £27,500, and goes head to head with the BMW 330i SE auto which costs £27,960 on the road. The BMW 3-series won this year's Fleet News Award for Best Premium Upper-Medium Car, and the Jaguar will need to provide a strong challenge if it has any chance of knocking it off its perch next year. The most expensive car in terms of front-end price is the Mercedes-Benz C320 Elegance, at £30,635, while an Audi A4 3.0 quattro SE Tiptronic seems quite reasonable at £26,240. The Audi is the only car other than the Jag to offer all-wheel drive.

Cynics might mutter that giving the X-type four-wheel drive was a way of getting Jaguar out of a corner. The platform used for the X-type was set up for a transverse engine and front-wheel drive (in case you didn't know yet, it shares some of its under-pinnings with the Ford Mondeo). But Jaguar maintains four-wheel drive was something it had considered in the past, and the X-type seemed an ideal opportunity to introduce it.