Lexus baby to arrive 2011

The front-wheel drive compact will drop in below the existing IS sedan and run straight up against the BMW 1 Series and Audi A3. The target starting price is less than $50,000 and it would quickly become the best seller in the Lexus range in Australia.

"We'll continue to add products. Next is the non-confirmed entry-level Lexus," says the head of Lexus Australia, John Roca.

"We've been discussing it for a number of years. It is looking like it won't be an entry-level SUV, but an entry-level passenger car. It would be a 1-Series competitor, or an A3. It's not confirmed yet, but we're thinking 2011."

Overseas reports point to a CT badge on the car and production early in 2011, despite earlier rumours of BS or CS nameplate, and it is expected to be a premium hatchback in the C-size segment.

Work on the C-Premium Lexus has been underway for more than three years and it should be unveiled at the Tokyo Motor Show in October. Lexus has registered three trademarks for the car in America - CT 200h, CT 300h and CT 400h - already pointing to a hybrid powertrain.

While the CT is still well in the future, Lexus is pushing hard to recover lost ground in Australia before the end of the year. "Yes, our results were down 32 per cent on last year by June. We expected it. The luxury market is down 33 per cent, so we're online with that," Roca says.

"But we expect the second half of the year to be stronger than the first." That strength will come from the push with the RX SUVs and the IS convertible, which are right in Lexus heartland.

Still, Roca is the first to admit his brand does not have the depth to compete with Benz, BMW and Audi. "We're playing rugby 15s with six players. Why aren't the other guys doing better with 15 players in all 15 segments," he says. "We are still in position four in the luxury market, which isn't bad."