Jaguar has long offered diesel engines in the European market where oil burners are popular thanks to the high fuel prices. They briefly offered an XJ with a BMW diesel in the US market in the early 1980s before falling gas prices made the bottom drop out of the diesel market. The current 2.7L V-6 that was jointly developed by Ford and PSA is used in the S-Type and XJ but hasn't been offered in the XK because it didn't have enough power to be suitable for the application.

It appears that will soon change as BMW has just launched the 635d in Europe and Jaguar wants a direct competitor. Ford will upgrading the diesel V-6 to 3.0L and about 250hp for installation into the XK coupe/convertible and the new XF sedan that's debuting in Frankfurt. If the new CAFE regulations go into effect we'll hopefully see this engine over here as well, especially in the XF.

[Source: AutoCar]

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