Jaguar has stepped up its challenge in the compact prestige sector by introducing Sport versions of the S-type luxury saloon targetted at high-performance rivals like the BMW 5-series.

European operations director Stephen Perrin said: 'We've singled out our targets as the BMW 528 and 530 and the aim is to compete head-on. We have made significant progress in the corporate sector since the S-type was launched 18 months ago and are delighted to be making ground against both BMW and Mercedes-Benz. But now the time has come for us to widen the appeal of this range in order to win more conquest business.'

Perrin said the S-type was achieving all the company had hoped for in returning Jaguar to the business transport sector it dominated with the original version and claimed the model range was also attracting customers who were moving up from non-prestige brands.

'The styling of this car has been so well received that we're confident the Sport trim will extend its appeal to younger buyers.

'More than 50,000 S-types will be sold this year - half the registrations are in the US but Britain, Germany and Italy are strong markets and we hope the Sport will add at least another 1,500 sales in the UK corporate sector next year,' he said.

The Sport package is available with both the 3.0-litre, 240bhp V6 and 4.0-litre, 281bhp V8 engines and uses paint to replace much of the brightwork on the standard cars. Both versions stand on larger alloy wheels and feature improved handling. On the road prices are £30,600 for the V6 and £38,400 for the V8, and deliveries will start early in the new year.