JAGUAR is considering building a new small saloon to join the model range below the mid-size executive car X200 due to be launched in around 18 months' time. The manufacturer has yet to decide whether the car, codenamed X400, will come to production or whether it will be built in Britain or overseas. An in-depth study of the possibilities is now under way.

A spokesman said: 'We have been looking at the market for a car which would fit in below the forthcoming X200. We have now upgraded those studies to look at the feasibility of a car programme. Sourcing is one of the things the study team will be examining and we are looking at a number of plants, both in this country and overseas.'

He said heavy investment would be needed to bring Jaguar's existing west Midlands plants up to capacity for the forecast 100,000-vehicle production programme.