New York Auto Show: Land Rover Likely to Build 40-MPG SUV

Phil Popham, managing director worldwide for Land Rover, indicated strongly at the New York auto show today that Land Rover intends to build a production version of the LRX Concept, a small, diesel-powered SUV. In an interview, he said the LRX could get as much as 40 mpg. Land Rover first unveiled the LRX at the Detroit auto show in January 2008. The concept car can also run on bio-diesel fuel.

India’s Tata Motors bought Land Rover and Jaguar from Ford last year. Meanwhile, Land Rover is struggling, especially in the United States, where consumers suddenly turned a cold shoulder to SUVs last year, when gas prices soared to $4 per gallon.

Popham said U.S. sales have recovered some, since gas prices fell back closer to $2 per gallon. In March, Land Rover’s U.S. sales of 2,248 units were 26.4 percent below the year-ago month, according to AutoData Corp. For 2008, U.S. sales were down 40 percent to 29,718.

BNET Auto Analyst Jim Henry interviewed Popham at the New York auto show on April 8. The following are edited excerpts.

BNET: Tell me about selling SUVs in a market that’s down on SUVs.
Phil Popham: Long-term, I don’t think people’s automotive needs are going to change that much. If you need a seven-seater now, you will need a seven-seater in the future. If you need the capacity to tow and carry now, you will need that capacity in the future. In fact, customers are demanding more and more, more technology, more gizmos.

BNET: What’s changed?
P.P.: What’s changed is the customers’ awareness of the environment and awareness of the cost of running a vehicle. True, our customers are affluent, but they’re also discerning. They expect a new vehicle to cost less to run. They expect it to have good residual values. They expect to get more fuel-efficient as we replace vehicles long-term.

BNET: What have you got coming up?
P.P. We have announced that subject to some engineering hurdles we still have to clear, that we will produce a vehicle based on the LRX Concept. It will be a smaller Land Rover, and with regard to sustainable mobility, we will use technology, we will use lightweight materials, we will use smaller-displacement engines and flex-fuel capability. This vehicle potentially could reach 40 mpg.

BNET: Did your U.S. sales improve when gas prices fell?
P.P. Without a doubt, sales of premium cars and trucks are directly affected by fuel prices in the U.S. That’s become one of the bigger considerations in the United States, whereas in Europe, people have been very focused on CO2 emissions for a long time. U.S. consumers are shifting more that way, and carmakers have to accommodate them.