Jaguar eyes compact hatchback to succeed XE and XF

Entering the compact premium hatchback market could give Jaguar a very distinctive slot in a segment that’s good for 800,000 units per year in Europe alone.

Aside from this being a segment Jaguar has never explored, such a car could, if aligned with the brand’s three SUVs, deliver bigger volumes than the current core XE and XF models as the saloon market continues to dwindle around the world. Such a volume product would also give a boost to Jaguar’s dealers.

But perhaps the main industrial problem facing Thomson’s vision is finding a suitable platform for a premium hatchback.

Jaguar’s new flagship, the electric-only XJ saloon, is due to be revealed this year. It will be a major landmark for JLR as the first car built on the MLA architecture, which can be configured for a traditional ICE car, a plug-in hybrid or an EV.

MLA will be used as the basis for most future JLR models, but there’s a question over whether it can underpin smaller and less expensive cars, such as the eventual replacement for the Jaguar E-Pace SUV and its Land Rover sister models.

If it can, Thomson has the big advantage of the most modern underpinnings. But if it can’t, it seems highly likely that JLR would have to work on a platform-sharing project with another manufacturer.

In any case, it’s possible that JLR needs a premium transverse-engined architecture for the eventual replacement of the E-Pace, Land Rover Discovery Sport and Range Rover Evoque.

Adding a Jaguar compact hatchback to this line-up could bulk up the economies of scale nicely; these four models would together have the potential to contribute up to 400,000 sales annually for the company.

The most obvious cooperation for JLR would be working with BMW to use its compact front-wheel-drive UKL architecture, which underpins the current 1 Series, 2 Series Gran Coupé and Mini hatchback. JLR and BMW are already working together on powertrain technology and the current Mini is made in Britain, as are the UKL engines.

JLR’s Halewood factory, which builds the transvers-eengined Discovery Sport and Evoque, doesn’t have space for another model, which is why the E-Pace is made by Magna Steyr in Austria. A tie-up with BMW’s front-drive programme might allow some future JLR models to be produced at BMW sites in the EU, helping both firms optimise factory usage.

Such a tie-up would stem partly from the massive costs of developing new vehicles that can meet the EU’s 2025 CO2 emissions regulations, which are testing even the wealthiest of Europe’s car makers.

It’s still possible that Jaguar’s product planners could decide to have a third crack at the global market for medium saloons – something that wouldn’t require platform-sharing – by launching a single replacement for the XE and XF based on the MLA platform.

A new compact Jaguar saloon could make sense configured as an extremely aerodynamic and frugal concept with traditional Jaguar driving dynamics.

With three other EVs in the brand’s future line-up and the need to keep the price competitive, it’s unlikely that this new entry-level model would be sold as an EV.

We would expect such a model to instead be a plug-in hybrid, initially using three- and four-cylinder engines, weigh less than the XE (thanks to the MLA) and have exceptionally slippery styling. We would also expect a new-style interior as Thomson starts to redirect Jaguar’s design language.

Jaguar’s biggest challenge

Whichever of these two conceptual new models ends up arriving in showrooms, another huge hurdle is on the horizon for car makers – something that could mean any new entry-level Jaguar would need to undergo major re-engineering just two years after it was launched.

The details of the long-awaited Euro 7 emissions regulations, which are due for the 2026 model year, have started to filter through ahead of an expected official announcement next year.

Analysts have long feared that the new regulations could be expensive for manufacturers to meet, but the engineering reality might be even more dire. According to a widely quoted interview with Porsche’s 911 chief, Frank-Steffen Walliser, the Euro 7 regime is expected to put a limit on the power per litre that can be developed by an engine.

Walliser has predicted this will not only mean many Euro 7 engines will have an increased number of cylinders in order to deliver sufficient power but also that they will need a much greater catalyser capacity.

Ironically, with so many cars sold in the 2025 EU market needing to be plug-in hybrids, healthy engine power is crucial to help offset the extra weight of the batteries.