Land Rover has been offered up to £27m of government money to develop an efficient new diesel hybrid vehicle.
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Based on Land Rover’s LRX concept, the new car would be the smallest, lightest and most efficient model the firm has ever produced.
The government said the grant is separate from the £2.3bn aid package being discussed to help carmakers through the recession.
‘Green’ Land Rover project
Land Rover will make a decision later this year on whether to go ahead with the £400m project at its factory in Halewood on Merseyside.
Phil Popham, managing director of Land Rover, said: ‘We welcome the Government’s support for this project, which would form a key part of our future product plans and which we very much want to put into production.
‘The compact size, lighter weight and sustainability-focused technologies of the LRX Concept showed how Land Rover is planning to respond to the needs of a changing world.’
Around 2,000 workers are employed at Halewood, which currently produces the Land Rover Freelander 2 and Jaguar X-Type.
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