The replacement for Land Rover’s compact, family-friendly model, the Freelander, was announced this week with a new name – the Discovery Sport.

Pulling the Freelander into the Discovery range is a sensible move for the Land Rover/Range Rover brands. It rationalises the model ranges, and it co-opts a name which has assumed sub-brand status thanks to the Discovery’s combination of modern but uniquely Land Rover looks and unbeatable functionality. The intention is clear from the oversized ‘Discovery’ bonnet badging where ‘Land Rover’ used to sit.

The new Discovery Sport has been engineered and packaged to provide more space than the outgoing Freelander, including a third row of seats, in a barely-bigger footptint. That’s clever. And it manages it while looking sleeker, more premium and completely contemporary.

But in doing so it leaves behind the Land Rover design language which has helped make the existing Discovery a brand icon and a statement of resolute differentiation from SUVs produced by other brands, which are mass-adopting a lower, less utilitarian look. The exterior styling also has a lot in common with Range Rover’s urban, fashion-oriented Evoque model, and plenty of similarities with the Evoques’ big brother.

It even shares that Range Rover’s Sport tag. This merges and confuses the two brands. But, more importantly, sportiness has little if any relevance to Land Rover. It’s diffuses the brand.

So what makes the Discovery Sport a Land Rover? And what will make the Discovery replacement a Land Rover? It’s no longer the styling – if anything, Range Rovers now have the more utilitarian body shapes. And it’s not the core value of functionality – after all, the Range Rover Sport also offers seven seats.

The increasingly high price point for Land Rovers doesn’t help. At launch – with only one engine, taken from the existing car – the Discovery Sport will cost from £32,000 to £43,000. A few options and the price will creep towards £50,000. That’s well into Porsche Macan territory – an SUV which is sporty because the brand dictates it.

Compare Land Rover’s price positioning with, say Audi’s. Equivalent versions of its Q5 SUV range top out at £37,500. OK, it’s not a Land Rover – but if the unique identity of the Land Rover brand is diluted then so is the emotional appeal of its products. Which is where Audi, BMW and Mercedes come in. They’ve aggressively targeted every market segment, especially SUVs. They’re premium but they’ve opened themselves up to everyone rather than adopt exclusive pricing. They’re a threat, the more so as Land Rover becomes more premium and less obviously functional.

Land Rover makes excellent cars. Sales will continue to grow in the short-to-medium term. But it has serious brand challenges. It should ensure that sales ambitions don’t shape the brand, and that Land Rover’s brand differentiation, achieved over decades of leadership, is both preciously preserved and clearly stated. That starts with the design of the product, but with the Discovery Sport it has become more generic. In the long term that’s going to help Audi, BMW and Mercedes more than Land Rover.