Land Rover to Add a Smaller, Less-Thirsty Range Rover

(MoneyWatch)  Land Rover today gave a "green" light, pardon the expression, to build an all-new model based on the 40-mpg LRX concept SUV.

The company hopes the new model will help Land Rover shed its image as a gas-guzzler, as U.S. consumers have turned away from big SUVs.

Phil Popham, managing director worldwide for Land Rover, indicated earlier that the LRX was likely to be built. In an interview at the New York auto show last April, Popham said it would be built provided the new model could clear a few "engineering hurdles."

The LRX concept was designed to get as much as 40 mpg, and could run on bio-diesel fuel.

Land Rover says the production version of the new model will be part of the Range Rover model lineup. The Range Rover is the brand's largest and poshest model. Other variants include the flagship Range Rover and the sportier Range Rover Sport. The new car will be the smallest Range Rover ever, the company said.

Other U.S. models are the LR2 and the LR4. The Land Rover LR4 this year replaced the Land Rover LR3, formerly known in the U.S. market as the Discovery.

The all-new LRX-based model, which is yet to be officially named, goes on sale next year for the 2011 model year.

"The production of a small Range Rover model is excellent news for our employees, dealers and customers," Popham said today in a written statement.