As Ford conducts another review of its loss-making Jaguar brand with a view to considering options for the future, there's one question more than most that will be bouncing around the corridors of Ford's World HQ in Dearborn. What's wrong with the Jaguar X-type? And consideration of that question gets us to the heart of what's gone wrong with Jaguar over the past five years, writes Dave Leggett.

As a product, the X-type is not that bad, taken in isolation. The problems emerge when we take it in context.

Going back to launch in 2001, the car was - along to a certain extent with the S-type - at the centre of Ford's strategy to build Jaguar into a much higher volume prestige brand. The Jaguar X-type was supposed to be selling at annual volume approaching 150,000 units, which would lift overall Jaguar sales to 200,000 units, maybe more.

In the sunny uplands of this scenario Jaguar starts to become a serious competitor to the big gorillas in the automotive prestige brand jungle - the likes of BMW and Mercedes-Benz. Even better, there's the industrial strength and scale of Ford and its PAG grouping in the background to ensure savings in areas like engineering and parts procurement and thus ensure healthy profits.

That was the plan. BMW sells over a million BMW brand cars a year, so aiming for 200,000 units doesn't sound too outrageous.

But the X-type hasn't come in anywhere near its sales targets (production last year slumped to around 43,000 units) and that has left overall Jaguar output under 100,000 units (84,000 units produced in 2005).

The central problem is in the brand image and the nature of the car rolled out as the X-type. In taking the sporty but highly traditional Jaguar brand to a new constituency of younger high-achievers, many have argued that a more dynamic and radical design was needed. This car, remember, was entering a highly competitive segment of the market populated by proven products with strong brand values - such as the BMW 3-Series. But what we got was a conservatively styled classic three-box Jaguar - a scaled-down S-type sharing a platform with the Ford Mondeo.

That might not have been a problem if Jaguar hadn't bitten off quite so much to chew. Jaguar was fighting to establish a positive image in a crowded segment of the market; the conservative styling merely reinforced a more traditional Jaguar image that did not appeal to the new constituency that Jaguar was supposedly aiming for.

And it was only a few years earlier that the S-type was being heavily marketed to younger types (remember the singer Sting in the TV ads?); so now we have a smaller Jaguar executive sedan that looks broadly similar to the S-type. Some of the target demographic, people who perhaps wouldn't have considered a Jaguar before, were already buying S-types. The rollout of the X-type begged the question, what's the point?

There was no diesel for quite a while in Europe, which didn't help (a pitifully low 1,500 X-types were shifted in Germany last year, by the way), but the main problems were in the US where a weak dollar wasn't helping profitability either.

In an intensely crowded and highly competitive field, the X-type failed to make the hoped for impact and also suffered from a poor quality reputation, compounding the sales gloom. Discounting didn't help the brand either. Last year X-type sales were just 11,000 in the US, almost halved on the previous year. It doesn't look like a model that will have a happy run-out before planned replacement at the end of the decade - if it's not axed before then. Indeed, 'replacement' may not be the right word, with Jaguar perhaps looking to do something very different, if it doesn't abandon the segment altogether.

Downsizing could be a way forward. One possible strategy for Jaguar is to retreat to lower volume and look to become profitable at that lower volume level. Maybe making the S-type in the US is not such a bad idea either - it shares a Lincoln platform after all (perhaps a Jaguar crossover of some sort would fly, too). And if Ford persists in wanting to broaden Jaguar's appeal, the designers perhaps need to be finally let off the retro leash; international car shows have been graced by some achingly good-looking Jaguar concepts over the years.

The worsening financial plight of Ford certainly suggests that maintaining the status quo is no longer an option. If Jaguar is to have a future, it needs to rediscover its core values and better align its products and its manufacturing footprint with them. The disarray at Jaguar - effectively treading water for several years, grateful to be in existence and for Ford bailout money - has left it short of the investment it needs to be really giving its bigger rivals a fight. It is certainly a little sobering to note that licence-to-print-money Porsche and Jaguar are operating at similar volume levels.

Dave Leggett

See also: US: Ford names 'strategic adviser' as Q2 loss deepens

US: Jaguar brand in Ford strategic review