The Daimler 2.5 litre engine was fitted to the Daimler 250 derivative of the Mark 2 (In European markets known as the Daimler 2.5-V8 then Daimler V8-250), having first been used in the Daimler SP250 (the SP250 was originally known as the Daimler Dart but "Dart" was a trademark of Dodge and had to be dropped by Daimler under threat of legal action.) The aluminium alloy Daimler engine was lighter than the cast iron block Jaguar sixes, reducing the mass over the front wheels therefore reducing understeer compared to the XK-powered versions under hard cornering.
The Mark 2 was discontinued in September 1967 and replaced by the 240 and 340, so named to distinuish them from the old 2.4 and 3.4 which, as noted above, became known as the Mark 1 following the introductuion of the Mark 2 in 1959. The Jaguar 240 and 340 were interim models to fill the gap until the introduction of the XJ6 in September 1968. The 340 was discontinued immediately but the 240 continued as a budget priced model until April 1969; its price of £1364 was only £20 more than the first 2.4 in 1956. (Eric Dymock, The Jaguar File, 3rd edition, 2004, Dove Publishing.)
The economies of the new 240 and 340 models came at a cost - the leather upholstery was replaced by 'Ambla' leather-like material and slimmer, more economical front and rear bumpers were introduced. Other changes included the replacement of the front fog lamps with circular vents and optional fog lamps for the UK market. The sales price was reduced to compete with the Rover 2000 TC.[3]
The 240's performance was improved over the old 2.4 model by upgrading the 2.4's cylinder head and twin Solex carburettors to the straight port 'E-Type' head and twin SU carburettors. For the first time the 2.4 litre model could exceed 100 mph (Eric Dymock, The Jaguar File, 3rd edition, 2004, Dove Publishing.) [4] resulting in a slight sales resurgence.
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