The current base version of the Jaguar XF is the 2.7L V6 diesel model but there could be an even cheaper XF in the lineup if demand for such a car rises. Jaguar, like all carmakers, is facing pressures from stricter emissions standards as well as rising fuel costs but unlike its rivals it doesn't have a range of efficient powertrains. BMW’s 5-series and the Audi A6, arguably two of the XF’s closest rivals, start with a 2.0L turbodiesel engine and these models account for the bulk of sales in Europe.

That’s a significant chunk of the market Jaguar is missing out on. Jaguar’s product development chief Mick Mohan recently stated that developers were keeping a close eye on the market and if customers start demanding it the car would be built. A smaller engine could also increase Jaguar’s fleet sales, which currently stands at 30% of all XF sales. Such a car would also be ideal for the homeland of Jaguar’s rumored new owner Tata. If the Indian giant wanted to kick off sales of the XF back home, a new entry-level 2.0L diesel would suit the market much better than big gas guzzling V8s.

According to latest reports, Jaguar’s engineers have several designs for compact diesel engines already completed but they are not being developed as yet. Another solution is to borrow an engine from the Ford parts bin but the upcoming split may hinder such a proposal.