That Jaguar is set to build compact cars is not a surprise. It’s a necessity and a belated one at that.

The brand has to grow and to do that it has to diversify. Large, essentially traditional saloon cars and sports cars are not enough. It’s 10 years since Porsche started producing the Cayenne SUV, which now provides over half its sales. And in that time BMW, Mercedes and Audi have transformed their product ranges by introducing new models into parts of the market they’d never previously touched. Including downsizing into compact and mini vehicles as well as SUVs. This is where the growth is, and will continue to be as the Chinese market dynamics shift from luxury for the wealthy few to affordable premium for the new middle classes.

Add in the facts that the compact Range Rover Evoque – a daring departure for the brand – sold more than twice Jaguar’s total volume in 2012 on its own, and that the Jaguar brand accounted for less than 20% of Jaguar Land Rover sales in the first half of this year, and it’s clear the new strategy is not a choice for Jaguar. It’s an imperative.

But it’s one which needs extremely sensitive handling. Jaguar is not a German premium brand. It’s a British brand with heritage. And a royal warrant. When the prime minister climbs into his XJ it’s a statement of pride, not efficiency. Mercedes are driven by taxi drivers. Audi has diversified to the point where it is commoditised – you don’t need to look anywhere else, whatever kind of car you want.  BMW has even invented a few sub-niches of its own. Jaguar doesn’t do these things and doesn’t need to.

The mere fact that a 3-Series rival and an SUV will bear the Jaguar badge will be enough of a leap. Remember that Mercedes makes trucks. Audi has its roots in NSU, which made lawn-mower engines. And BMW used to make three-wheelers. Whereas Jaguar established itself making desirable cars, with sporting pretensions.

It has therefore recently been busily reinventing its image around sportiness, with core brand campaigns centred on athletics and cycling – where Britain currently excels. Compact mainstream models and especially SUVs don’t lend themselves to this. But Jaguar is cleverly taking the route of aluminium architecture for the new cars, meaning light weight for better handling and performance. This will help the brand fit of the new cars – and, just as important, add premium perception and differentiation.

The sales model for the new Jaguar SUV will obviously be its cousin, the Evoque, but the model for its positioning and image will surely be the Macan, Porsche’s new smaller SUV. Porsche has done Jaguar a huge favour by making an even bigger leap first.