Ford Motor Co.'s luxury Jaguar brand is killing production of its struggling X-Type model for North America, the auto maker said.
Jaguar has decided to cease production by the end of the year, the company said, amid declining profit margins and a competitive, saturated U.S. luxury segment. Jaguar will have enough stock of the X-Type to support sales through the first quarter of next year. The X-Type will continue to be sold overseas, mainly in its home U.K. and other European markets.
In those markets, Jaguar will market a new diesel version of the X-Type for the 2009 model year, which will feature an automatic transmission for the first time, according to a letter from Jaguar management to dealers reviewed by The Wall Street Journal. That powertrain isn't compliant with stringent U.S. emissions regulations but Jaguar believes the vehicle will prove popular in Europe, the letter says.
The X-Type has been a sales loser in the U.S. Sales of the sedan and wagon are off 43% and 66%, respectively, so far this year, according to the most recent data from Autodata Corp. Overall, Jaguar's sales have plunged more than 27% through September.
Ford, suffering steep financial losses in its core North American operations, has indicated it is looking to sell Jaguar, as well as Land Rover, another of its luxury brands. Ford has already unloaded luxury brand Aston Martin and is considering selling Volvo in an effort to pare its portfolio and refocus on its core brands under new CEO Alan Mulally.
"X-Type volumes have declined markedly in North America over the last few years to an extremely low level, in the face of intense competition from import and domestic brands in the compact premium segment," says the letter to dealers.
"The reduction in volumes has been paralleled by a continued weakening of the U.S. dollar against the U.K. pound," the letter continues. "The resultant deterioration in profit margins has made it increasingly difficult to continue marketing X-Type in North America."
In a statement, Jaguar said it made the decision to stop X-Type production after "extensive consultation with many of our dealers."
In North America, Jaguar will continue to sell the XJ sedan, XK sports car models and an all-new XF model starting in March, the company said. ( WSJ )