Shortly before I climbed aboard the 3.0 V6 Diesel Luxury, a Jaguar spokesperson described the car as "the entry-level XF". Going by the price list, this isn't quite true, but it was an interesting and possibly revealing slip. There is in fact one XF which is cheaper (by £1000) and which also has a three-litre V6 engine, though this time fuelled by petrol.If you want a budget XF, the petrol car appears at first to be the one to go for, but the diesel makes more sense. First of all, it's slightly quicker, and it is also vastly more economical, with combined fuel economy of 42.0mpg as opposed to the petrol's 26.8mpg. The correspondingly lower CO2 emissions (179g/km versus 249g/km) mean that the diesel is also £230 cheaper to tax each year, quite apart from the fuel savings - diesel would have to be more than one and a half times more expensive to buy than petrol for the two cars to be equal in this respect.Of course, you might prefer the petrol car because you just don't like diesels, but that would a hard prejudice to sustain in an XF. I was always a big fan of the 2.7-litre diesel previously fitted to the XF (such as the car we reviewed last summer), and to other Jaguars as well as Fords, Land Rovers and Peugeots, but the new 3.0 is undoubtedly better, with more power, better straightline performance and very significantly improved economy and CO2 figures.Perhaps just as importantly, though, the 3.0 diesel is so quiet that you have to listen hard to convince yourself that it's a diesel at all. Only a distant grumble gives the game away; the high-pitched whirring noise which was once characteristic of all diesel engines is completely absent.So the test car probably is the entry-level XF in terms of the models you would actually want to buy. For the relatively modest sum of £33,900 you get that splendid engine (there's a 275bhp version too, but this 240bhp provides all the performance you need), one of the best and smoothest-shifting six-speed automatic gearboxes in the business (with a Sport mode, though if you're in that sort of mood you're better off changing gear manually using the paddle shifts on the steering wheel), a high level of equipment (there's no irony in the fact that Jaguar uses the name Luxury for the most basic model in the range) and a general feeling of refinement and class.That feeling is in no small measure due to the smoothness of the major controls. The steering, brake and throttle are all beautifully weighted, and in that respect that XF is a delight to drive at any speed. I'm also pleased to be able to report that this is the first XF I've driven which did not suffer from steering wheel shake and, on some occasions, rattling of trim every time it encountered a bump. Jaguar has not made any claims about this, but it seems that some much-needed remedial work has been done behind the scenes.But there are a few problems, the first and most serious being that the XF Luxury comes as standard with 18" wheels covered by low-profile 245/45 Pirellis. These are - and let's not be ambiguous about this - THE WRONG TYRES for the car. With one exception which I'll come to shortly, the suspension feels very well set-up, but the general effect is ruined by the way the tyres transmit so much information about the road surface into the cabin. There is no point in designing a car which rides so well and then fitting tyres which make the average motorway feel as if it has been entirely covered in cat's eyes.No doubt the marketing department would collapse in fits if anyone suggested fitting smaller wheels and larger-profile tyres, but it would make it so much better. For all the good the 245/45x18s do for the XF, you might as well go the whole hog and carve a swastika into the bonnet with a rusty hacksaw blade.This does not disguise - and in fact may exacerbate - the one problem with the suspension. All is not entirely as it should be at the front end, where the springs and dampers don't seem to have been successfully chosen to counter the weight of the engine. Turn-in is nevertheless quite sharp, but there's more body roll than seems necessary, and I think the XF would feel more in control if the suspension were tightened up very slightly.My only remaining complaint is that the high-level brake light obscures the view through the bottom of the rear window, which can be surprisingly irritating in motorway traffic. Apart from this and the other matters already mentioned, the XF Diesel Luxury is a splendid and very refined car which, in three-litre form, must be giving the German opposition something to think about. But it's still not as good as it could be. Engine 2993 cc, 6 cylinders Power 240 bhp @4000 rpm Torque 369 ib/ft @2000 rpm Transmission 6 speed auto Fuel/CO2 40.6 mpg / 179 g/km Acceleration 0-62mph: 6.7sec Top speed 149 mph Price From £35031.00 approx Release date 01/01/2009