It’s only been 12 months since Jaguar launched the new XF, yet it’s already time for an upgrade in the form of a new diesel engine.

If the excellent XF had a weakness, it was the aging 2.7-litre diesel engine, but Jaguar has remedied that with a replacement 3.0-litre unit that’s both more powerful and cleaner.

It’s available in two states of tune, the more popular 240PS that will account for two-thirds of volume, and the 275PS version driven here and designed to upset BMW‘s excellent 535d. Both have a fuel economy figure of 37.6mpg and emit 179g/km, and although the latter figure is some way away short of the magic 160g/km capital allowance threshold, it is still impressive given the XF’s standard auto gearbox. An auto 530d or 535d would be in the same BIK band at 176 g/km or 178g/km, and an Audi A6 is even higher at 189.

It’s pleasing to report that the XF, having achieved a four-out-of-five score in last year’s original test drive, is better than ever. The new engine is a revelation, given that it’s come from a company that hasn’t the technical resources of a BMW, Audi or Mercedes. It’s powerful and refined, and is close enough to BMW’s 3.0-litre diesel in performance and satisfaction terms that it would require a head-to-head test to separate them – no mean feat given that the BMW is possibly the best engine on sale.

However, the XF triumphs as an overall package. It’s more refined and comfortable than its chief German rival, and about as satisfying for the spirited driver. There’s also more of a sense of pride in ownership, thanks to the more luxurious interior, better specification and to these eyes at least, more beautiful styling.

The XF also matches up well to its BMW rival on pricing, especially given that the auto gearbox is standard. The top-spec Portfolio, the only model available to test at this time, in particular is a lot of money, but significantly better value is to be found in the middle of the range with the Premium Luxury spec.

The new engine gives the XF what it deserves, and cures the car’s only major weak spot. It’s difficult not to recommend it.

Jaguar XF 3.0D S Portfolio
Model price range £32,900-£59,900
P11D price £43,970
Fuel consumption 37.6mpg
CO2 (tax) 179g/km (26%)
BIK 20/40% per month £191/£381
Service interval 16,000 miles
Insurance group 18
Warranty 3yrs/60,000 miles
Boot space 540 litres
Engine size/power 2993cc/275PS
Top speed/0-62mph 155mph/6.4sec
On sale March 2009
Score 9/10
Verdict Brilliant new engines gives XF
even more appeal and puts it
among the best in class