Jaguar dealers will be denied the £30,000 F-type sportscar after the Coventry car-maker canned the model in favour of beefing-up its range of estates and diesels. The move will make the replacement for the XK8, due in autumn 2005, the earliest that Jaguar dealers will see a new sportscar capable of combating new models from BMW and Mercedes. The mid-engined two-seat F-type was aimed squarely at the Porsche Boxster and was due on sale in spring 2005.

But the programme was a complex one and the final design employed a bonded and rivetted aluminium chassis and a mid-mounted engine and transmission from the X-type. To make a business case for the low volumes of production - just 25,000 units a year - Jaguar was poised to outsource its manufacture to Pininfarina of Italy. The Italian coachbuilder had offered to share investment costs and emerged ahead of two other rivals - Valmet, which assembles the Boxster for Porsche, and Magna Steyr.

Despite outsourcing the model, Jaguar was still concerned about the drain on its own engineering resources to ensure a smooth production ramp-up with no quality problems. Insiders say Richard Parry-Jones, Ford's chief technical officer, became a key sceptic of the programme and that PAG chairman Wolfgang Reitzle, who left on May 1 to head-up forklift truck-maker Linde, reluctantly accepted the need to outsource the manufacture. Jaguar had to decide within the next few months whether to start heavy investment in the tooling for the project, code-name X600, but has instead decided to concentrate on “other priorities”.

“We're growing twice as fast as our key German competitors did in their early years and we only play in a few market segments,” says Jaguar. “Although we had a killer product in the F-type it has become apparent we have to concentrate resources on core model lines.”

Also for the chop is the hot X-type R saloon, aimed at the BMW M3. Its supercharged 300bhp V6 was also to be used in a flagship F-type R. The engine is understood to be struggling to meet forthcoming exhaust and noise emission regulations.

Jaguar's new priorities mean the pace will quicken to launch the first Jaguar diesels - X-type will have a variant of Peugeot's 2.2-litre from late 2003 - and get the X-type estate into production. A 'Gemini' V6 2.7-litre 200bhp diesel, co-developed with Peugeot and to be built in Dagenham, is scheduled for late 2004 in the S-type. Both oil-burners will lift company car sales to user-choosers, who are switching to diesels in increasing numbers thanks to April's CO2-based benefit-in-kind tax system.

Similar timing is planned for the X-type estate. A sports hatch in the mould of the BWM 3-Series touring, it will boost sales because about 40 per cent of the European compact executive market is for estates. To fill the gap left by the F-type, Jaguar is hoping to pull forward the on-sale date of the XK8 replacement. Code-named X150, this is planned as a platform variant of the new bonded/rivetted aluminium-bodied XJ8, on sale next spring. By its launch date in 2005, it will be desperately needed. Today's car has to sell against the new Mercedes SL for another three years.

This year Mercedes UK predicts around 1250 SL sales and 1400 in 2003, which closes the gap on the XK8's yearly figure of 2000 or so. Jaguar must be fearing a repeat of last year's reverse in the executive segment, when Mercedes pinched Jaguar's traditional number one spot with 3576 S-class sales compared to 3096 for the XJ8. The all-new alloy-bodied XJ6 and XJ8 could help Jaguar regain market leadership - even without the all-important diesel.

Concentrating on diesels and X-type estates makes sense for Jaguar because of the volume potential. But the decision to put the F-type on hold will disappoint potential buyers wowed by the front engined concept (right) and tantalised by stories of a mid-engined production version to challenge the Boxster. The Boxster is hugely profitable for Porsche. That Ford couldn't make a business case for the F-type says more about the shortcomings of its product development process than the technical difficulty of building a premium-priced sports car.