Jaguar will cease car production at the historic Browns Lane plant in Coventry, with the loss of 400 jobs.

The move is part of a restructuring plan to return the historic marque to profit.

Ford hopes the workforce reduction will take place through voluntary redundancies, with the remaining workers transferred to other divisions. Up to 425 workers will transfer to Castle Bromwich while 750 mostly white collar workers will move to other positions with the group. 310 staff will remain at Browns Lane to make wood trim for Jaguar interiors.

Union leaders reacted angrily, saying that Ford was attempting to “kill off” the brand.

Jaguar also announced they would withdraw from Formula One at the end of 2004.

Mark Fields, PAG Executive VP, said: “Decisive action was needed to get Jaguar back on track and to ensure a viable future. Despite the actions taken by the company’s management over the past few years and despite the fact Jaguar is again the highest rated European brand on product quality, Jaguar is back in a serious loss-making position. There are a number of external factors which have exacerbated the situation but we have faced and tackled the fundamental reality, that Jaguar simply cannot support three assembly plants with annual sales of 125,000 cars.”

As part of the restructuring plan, Ford announced its commitment to strengthen the Jaguar product range.

A new XK sports car codenamed X150 has been confirmed, and will go on sale in early 2006. It will be an all-aluminium car and will be the first to feature Jaguar’s new design language.

The XJ range will be extended with the introduction of a premium diesel engine next year, while a high performance diesel version of the X-Type will also arrive. In addition, the X-Type estate will be launched in the US under the Station Wagon moniker.

Joe Greenwell, Chairman and CEO Jaguar and Land Rover, said: “The fact is despite significant sales growth and excellent levels of quality in recent years, we have not been able to keep pace with significantly larger competitors. We have too much capacity and this is our underlying structural problem. Our bottom line has further deteriorated this year with the weakness of the dollar, unprecedented incentives in the premium market and the shift from premium cars to SUVs. We had no choice but to take action and I firmly believe that all the elements of this plan are essential if we are to stem the losses.”