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Lexus takes on baby market

It will sit below the existing IS250 sedan and is aimed directly at the 1 Series, with a likely starting price below $50,000.

The plan points to a compact hatchback body, rear-wheel drive and a range of sporty engines with the emphasis on six-cylinder power and refinement. But there is an equal chance that Lexus could head into the crossover field, making the newcomer a small all-wheel-drive wagon.

The car is not officially confirmed, although Lexus executives are open in their discussion of the project.

“I believe in the strong necessity to include an entry-level Lexus model,” the executive vice-president of Toyota Motor Corporation, Tokuichi Uranishi, says.

“It's not decided. It's just an idea at this moment.”

But it is an idea, which is already being welcomed by Lexus in Australia.

“We are getting a lot of requests for that sort of car,” the head of Lexus in Australia, John Rocca, says.

“And, looking at our competitors, there is certainly a market there for it.”

Uranishi says a baby Lexus would help the brand to improve its average CO2 emissions, offsetting the poor scores of heavyweights including the LandCruiser-based LX, but Rocca can see other advantages.

“What it brings to the brand is another model, for starters. And market share,” he says.

“I think the advantage we would have is that, having the Toyota brand, there is credibility that we can build a car that size. Similar to what we have already experienced with SUVs in the brand.”

Lexus is pushing hard in Australia with six models from the IS through to the upcoming change for the LX500.

The heavyweight four-wheel drive is expected to be a star in 2008, lifting the current sales rate of 12 cars a month to more than 50. The improvement will also be helped by a two-level strategy to set a competitive price point against rivals including the BMW X5, Porsche Cayenne and Mercedes ML.

Rocca says the new models are the key to Lexus's plans to fight BMW and Mercedes for luxury car sales leadership in Australia.

“We've got a pretty aggressive business plan that we are putting through at the moment,” he says.

“It's reliant on product, but we have to plan out to 2015. It will range from 16,000 to 24,000 sales a year."

“Plans like that are driven by product. But in the short term it will be driven through the dealer network. We need to expand the network."

“At the moment we're at 22 and by 2015 we'd like to be at 38 dealerships. Most of the expansion will be rural and we're trialling the Japanese image, which has been used for setting up the brand there."

“We're adopting that in Australia as a trial in Perth. The first of the new-look dealerships opens there in January.”