An all-new XJ6 was unveiled in 1986 continuing with the XJ nomenclature but with a significantly different styling. It was known as the Jaguar XJ40. This new model was much more modern in appearance with a more angular, geometric shape. The front was designed to accomodate either a matched pair of round headlights or the rectangular single units fitted to US models and the upmarket Sovereign and Daimler models.
The XJ40 succeeded the Jaguar XJ Series 3 although the two models were sold concurrently until the Series 3 was discontinued in 1992. The redesign of the XJ6 began in the early 1970s but the project suffered a number of delays partly due to lack of funding and the 1973 oil crisis.
The XJ40 featured a new engine, the AJ6 inline-six replacing the classic but aging Jaguar XK engine used in earlier XJs. Initially, only two engines were offered - a 2.9 litre and 3.6 litre version of the XJ6 inline-six engine. These were changed to 3.2 litre and 4.0 litre versions in1990. In 1993 a 6.0 litre Jaguar V12 engine was added to this lineup and was fitted to the newly reintroduced XJ12 and Daimler Double Six models.
The transmission featured a four-speed automatic, replacing the previous XJ's three-speed, and a five-speed manual. The XJ40 became the first Jaguar to feature the Jaguar trademark J-Gate gear selector which was specially designed to allow the manual selection of forward gears without accidentally selecting neutral or reverse. The XJ40 also featured a completely redesigned rear independent suspension with the discs located near the wheels, a welcome change from the harder to service inboard brakes of the Series 3. The XJ40 production ended in 1994 to be replaced by the Jaguar X300.