Oz Scrambles to Meet X-Type Demand After Jaguar Cancels Model

Jaguar Australia Ltd. is scrambling to secure enough X-Types in stock to carry sales through to the end of the year, following the auto maker’s recent decision to halt U.K. production of the entry-level model at the end of the year.

Jaguar Australia General Manager David Blackhall says the X-Type, first released in Oz in 2002, accounts for about 40% of his company’s sales.

“It was not a totally unexpected announcement and will leave a range that is very much focused on true luxury and performance,” Blackhall tells The Daily Telegraph newspaper. “There is certainly not a large model range left, but it is new and fresh.”

Jaguar’s lineup includes the XF and XJ sedan and XK coupe and convertible, all of which are manufactured at the auto maker’s Castle Bromwich plant in Birmingham, England.

The all-new aluminum-intensive '10 Jaguar XJ, which made its global debut in London earlier this month, represents a dramatic departure from the outgoing model, the auto maker’s top North American executive recently told Ward’s.

The entry-luxury X-Type, dubbed the “Baby Jag,” debuted in the U.S. in 2001 as an ’02 model. Sharing a platform with the European Ford Mondeo, the X-Type was previous-owner Ford Motor Co.’s attempt at a mass-market Jaguar.

From the beginning, the car struggled to find a niche and was pulled from the U.S. market in late 2007.

Jaguar Cars Ltd. CEO David Smith says 300 jobs will be lost through voluntary redundancies at the auto maker’s Halewood plant in northwest England as the result of the decision to drop the X-Type are necessary to protect other investment plans.

Jaguar X-Type to end production at year’s end.

“Our industry has been especially badly hit by the recession and the premium sector more than others,” he says. “Jaguar Land Rover retail sales fell 28% in the past 10 months.” Jaguar built 15,923 X-Types last year for 21.8% of its 72,876-unit total output.

Northwest Regional Development Agency CEO Steven Broomhead says the earlier-than-planned end of the X-Type is understandable after the model failed to sell in the significant numbers required to make it viable for Jaguar Land Rover (JLR). The NWDA leads the economic development and regeneration of England's northwest region.

“Looking ahead, the factory is well-positioned to manufacture the new Range Rover based on the LRX concept, so this is not the end of Halewood by a long shot,” Broomhead says in a statement.

Tata Motors Ltd.-owned JLR earlier this year was offered a £27 million ($44 million) grant by the U.K.’s Department for Business to support the investment needed to build the new, smaller Land Rover model at Halewood.

The grant would be in addition to the £1 billion ($1.6 billion) in emergency funding the government provided JLR late last year to cover its losses, as the global recession took its toll on sales.

Critics at the time said Tata should have been aware of the significant investment required to rebuild the subsidiary’s reputation and bring earnings up to sustainable levels.

Tata reportedly took out a $3 billion bridge loan to finance the JLR deal and told the government it was facing investing “tens of millions” more British pounds, or about $1 billion, in its subsidiary to avert a cash-flow crisis.

“We understand the company is hoping to make a final decision on (the new Range Rover for Halewood) later in the year,” Broomhead says.

“Jaguar Land Rover has stated the ability to drawdown the E340 million ($484 million) European Investment Bank loan is one of the factors involved in this decision-making process.”

Tata also is seeking the EIB 3-year loan to cut fleet emissions and is asking for guarantees for private bank loans worth about £500 million ($823 million), the Financial Times reports.

The Indian company reported balked at conditions U.K. ministers attempted to attach to the financial aid, including representation of the JLR board and operational control of the auto maker – demands that mostly have been dropped.

Broomhead says while the job losses due to the X-Type’s demise will be disappointing for the region, he says it’s important to keep the situation in perspective.

“The government (is) fully aware of the importance of JLR Halewood and the local suppliers to our region’s economy. We are hopeful these negotiations will lead to a successful outcome.”