With the re-organisation of British Leyland in 1973, for a time Jaguar Cars Limited disappeared as a company name. Jaguar became simply a part of the Leyland Cars company. No Jaguar had taken part in first-line motor sport in the UK since the E-type and the Mark II faded from the scene in the mid-1960s. In theory, it would boost the image of both Jaguar and Leyland, if a Jaguar were to make a successful comeback in racing.

All British Leyland motor sport activities were now centralised, and the company increasingly made use of contractors who took on the preparation of cars, and the management of racing teams. Ralph Broad of Broadspeed had enjoyed a successful run with Triumph Dolomites in British saloon car racing. He had ideas of his own about the possibility of developing the Jaguar V12 engine for a proper racing car, and was therefore chosen to spearhead an attempt to bring a Jaguar back into racing, running the XJ12 coupé version – XJC for short – in the European Touring Car Championship (ETCC).

Development began in 1975, and the car was unveiled in March 1976.