Jaguar launched the XE back in 2015 as a groundbreaking compact to compete with the popular BMW 3 Series, Mercedes-Benz C-Class, and Audi A4. But even though it arrived with state-of-the-art technology and a segment-first aluminum structure, the XE failed to meet expectations. As a result, Jaguar is now looking for a way to replace it with a more appealing vehicle. What's more, the XF midsize isn't doing great either, and word has it that Jaguar might merge the slow-selling sedans into a single model.

Jaguar is considering a new compact sedan as a replacement

. Hybrid drivetrains are obviously the way to go now. Jaguar's German competitors are already offering mild-hybrid powertrains across the board and at least one plug-in hybrid version of their compact and midsize sedan. Since the compact and the midsize will be replaced by a single sedan of the compact variety, Jaguar could actually go with a four-door coupe design to keep things classy and sporty.

Jaguar could also opt for a hatchback

This seems rather strange since Jaguar has never built a hatchback. Also, premium hatchbacks aren't exactly popular in the U.S., where BMW, Mercedes-Benz, and Audi no longer offer such body styles. On the flip side, this option was hinted by Jaguar design chief Julian Thomson recently.

Speaking to Autocar, Thomson said he'd "love to do some smaller cars: and added that "it feels as though the time is right. Jaguar needs a global product that could appeal to younger buyers and more females as well."

Jaguar hasn't ruled out direct replacements for the XE and XF

Jaguar has yet to officially confirm that it wants to kill off the XE and XF. So we could still see next-generation models of these nameplates. With big XJ scheduled to go all-electric in 2021, Jaguar could take the same route with both the XE and the XF. Both models were last redesigned in 2015, so new-generation models could come in 2021 or 2022.

Jaguar actually built a hatchback

Although it has yet to enter this market, Jaguar actually considered it a for few years. Designed by Ian Callum and developed while Jaguar was under Ford ownership, the R-D6 featured a sleek and organic exterior design and reverse-hinged rear doors. The latter was based on technology from the Mazda RX-8, as the Japanese maker was part of the Ford group back then. The R-D6 was featured a side-hinged rear hatch.

Power came from a twin-turbo, 2.7-liter V-6 diesel engine rated at 230 horsepower and 369 pound-feet of torque. Developed in cooperation with Peugeot, the engine was the only component from this concept that made it into production, debuting in S-Type and then being offered in the XF and XJ. The engine was shared with Citroen, Peugeot, Ford, and Land Rover models, and it eventually evolved in the familiar TDV6 and SDV6 powerplants that generated up to 302 horsepower and 516 pound-feet of torque in the Range Rover Sport.