JAGUAR is pushing ahead with the feasibility study of its most important fleet car yet - the X400 - designed to go head-to-head with the Mercedes-Benz C-class and the next BMW 3-series. Signs are that the company will almost certainly give the green light to the car before the end of this year.

Early signs are that around 100,000 models could be sold annually - last year the company sold less than half that figure in total. It would go on sale in the UK in three years and would almost certainly be front-wheel-drive - a first for Jaguar. Most likely location for the production facility is the US, although design and engineering will be kept in the UK. Germany is likely to prove too costly to attract the investment.

Managing director Nick Scheele said the car offered a major opportunity for Jaguar. The company was now in the ideal position to expand into growth segments, he said. The news would revolutionise Jaguar's position in the UK fleet market, as thousands of fleet drivers look to trade up - or down - into upper medium size executive cars.

The recent success of Audi, BMW and Mercedes-Benz has proved that the market is rapidly moving towards luxury brands which offer best whole-life costs. Before then, however, Jaguar is preparing to launch its BMW 5-series competitor, the X200, next year.