Land Rover's project to make green cars on a budget of £400 million received a boost with the UK government granting £27 million to build a all new mini-4x4 'green' car, based on the Land Rover's LRX Concept.

Land Rover will receive a £27-million grant from the UK Government for the production of a new car, which the Tata Motors-owned company says would be used to produce JLR's lightest and most fuel-efficient model yet.

The car would be based on Land Rover's acclaimed LRX Concept vehicle, first shown at the Detroit Show last year, and would be the smallest, lightest and most efficient it has ever produced.

The announcement of the grant came as motor manufacturers and parts suppliers met yesterday in London to discuss the £2.3-billion loan announced by the UK government to the UK automobile industry in late January (See: Britain unveils £2.3 billion loan for car industry) http://www.domain-b.com/industry/Automobiles/general/20090128_britain_unveils.html

The £27-million grant is separate from the £2.3-billion loan package and is not linked to any aid that Jaguar Land Rover may get from the UK government to tide over the current financial crisis that has dragged the UK automobile industry down to its knees.

Land Rover said that it will take a final decision later this year as to whether it would go ahead with the green car project, which is slated to be manufactured at its award-winning Halewood facility and launched in 2011 and the grant has still to go through a number of approval gateways in the product development process before getting the final go-ahead.

Making the announcement business secretary lord Peter Mandelsonsaid that the government is fully committed to supporting the UK automotive industry for a lower carbon future and the Jaguar Land Rover project is aimed to design and build a greener car in the UK, safeguarding vital skills and technologies.

He also said that the project would secure production and employment at the Halewood facility and maintain the design capability for JLR in the UK and this was an important investment for the future.

Phil Popham, managing director of Land Rover has welcomed the government decision and support for the project and said that JLR's engineering feasibility study has shown that the company can very successfully deliver Range Rover levels of quality, drivability and breadth of performance in a more compact, more sustainable package and achieve its goal to exceed a 20 per cent improvement in CO2 emissions.

Last year, JLR made over £600 million in profit while it employed 75,000 people, spent £2.5 billion with suppliers and its exports were over £4 billion a year for UK.

The company also spends £400 million a year on research and development with one of the most modern research facility in the UK for automobiles accounting for around a third of the UK's total annual investment in automotive R&D.

With the use of clean, modern, efficient diesel engines coupled with intelligent management systems, Jaguar and Land Rover are capable of producing premium vehicles capable of over 40 mpg.

Jaguar has pioneered the use of aluminium with the result the XJ and XK are the lightest in their class, with the XJ being voted the greenest luxury vehicle for two years running.

Jaguar Land Rover was working with universities, the Technology Strategy Board and Advantage West Midlands to develop these new technologies.