Jaguar, the luxury car maker, is to suspend manufacture of its X-type for up to three weeks because production of the "Baby Jag" is outstripping demand, writes Geoff Gibbs.

The Ford-owned business said yesterday sales were being held back by global economic uncertainty and by the lack of a diesel version of the £20,000 car.

The firm, which introduced a number of four-day weeks at the end of last year to cut X-type production, said workers would be given details of the latest cutbacks later this week. The February shutdown, which is expected to last between one and three weeks, will affect 2,400 shopfloor workers at the Halewood plant on Merseyside (above).

Corporate affairs manager David Crisp said the aim was to address the imbalance between production and stock levels at present in the market. "We are operating in a very competitive market and there is an increasing uncertainty in global markets," he said. "The situation with Iraq does not help."

The X-type was launched in May 2001 in an attempt to make greater inroads into the European market, where it competes with the BMW 3 series and the C class Mercedes.

But sales have been hit by the popularity of diesel-powered cars in the sector. Jaguar estimates that diesel now accounts for around 80% of sales in Italy and up to 50% in France and Germany.

It hopes to address the problem with the launch of its own diesel version in the second half of this year.