There was a time, not so long ago, when buying a car to make a statement came down to a simple choice – if you wanted to make your neighbours believe you were successful, trendy, and generally someone worth borrowing a cup of sugar from, you bought the BMW.

Now, though, things aren’t so clear. We live in a time where BMW sells more 3 Series than Ford sells Mondeos, and BMW’s latest volume seller bears more than a passing resemblance to a bland Japanese saloon.

In the midst of all this, Lexus has launched their new IS saloon, which they’re hoping will appeal to the individual in us all. And, for the first time in a Lexus, there’ll be a diesel engine in the line-up.

The IS is the company’s second outing for its new design language, L-Finesse. It’s definitely more visually interesting than the BMW, with a thrusting, high-waisted look and neat details such as the aggressive rear light clusters.

It does have the largest door mirrors of any car we’ve ever seen, though, and we remain disappointed with the Korean-esque front grille.

Whatever your opinion of the look, there’s no questioning the execution: the panel gaps are paper thin and the doors close with a thunk solid enough to imply they’re blast-proof.

Inside, there’s a surprise for anyone who’s spent time in the old IS200 – there’s plenty of room in here. The new IS is 175mm longer and 75mm wider than its predecessor, but the key is in the packaging. In fact, the new IS feels far closer to its big brother, the GS, in terms of space than you might imagine.

Also in common with the GS is the high quality interior, with classy materials and quite astonishing fit and finish. Our one gripe would be the metallic-effect plastic surround of the centre console which feels a little like it’s on loan from a Corolla.

In the standard models, the centre console is home to a very busy-looking hi-fi system. While it offers a quality of sound reproduction from its 13 speakers that is likely to rival anything installed in your living room, it does look a little like something from the clearance section of the Argos catalogue. iPod integration comes as standard, though.

Most buyers will opt for the Multimedia Package, comprising Lexus’ excellent satellite navigation system, colour reversing camera and 14-speaker Mark Levinson hi-fi. Unfortunately, this bundle weighs in at a hefty £2,710; we feel Lexus should have kept the Mark Levinson system separate and brought satellite navigation within reach for more potential customers.

Cost issues aside, the Mark Levinson system must surely be capable of winning sound offs at your local drive-thru thanks to a pulverising combination of power and clarity. It’s backed by a six-disc in-dash DVD changer that can play movies in Dolby 5.1 surround, although the video cuts out when on the move.

The reversing camera offers calamity-free parking that can be optionally assisted by traditional ultrasonic sensors. A series of lines on the screen show where your vehicle will end up given your current trajectory to help you gauge when to stop before the familiar crunch-tinkle of a smashed rear light.

The navigation system has been improved for 2006, too, with a new, high resolution touch screen with more colours and faster updates. Its clarity is exceptional, and builds upon Lexus’ already excellent user interface for controlling the hi-fi, climate and other functions. No doubt as a result of the litigious American market, the navigation system can’t be programmed while the car is moving. Not even by your passenger. Lexus tries to make up for this with their voice assistance system.

The techno instruments continue the clarity theme, with the needles greeting you with an entertaining little dance as you start the car. The inner section of the rev counter glows red as you approach the redline, too. The various other displays in the cluster are a little overwhelming, though.

On the move, it’s clear Lexus have spent time making the IS a relaxing place to be, with sound damping materials stuffed into every crevice and even sound insulating sun visors and a windscreen with an additional layer.

The attention to detail extends to the underside of the Lexus, with an aerodynamically-designed undertray and diffusers to increase stability and reduce wind noise, while also contributing to a fuel-saving drag coefficient of just 0.27.

The multi-link suspension suppresses bumps admirably, both in terms of the ride quality and audible intrusion. In fact, the overall body composure feels far more refined than anything the Germans can currently offer.

That said, enthusiastic drivers will discover a slight top-heaviness to the handling that isn’t shared with the competition. Much of this feeling is a product of the new electric power steering, which becomes over-sensitive either side of the straight-ahead position. While this may encourage you to make use of the confidence-inspiring levels of grip (and you should), it makes the IS twitchy on the motorway.

Despite an initially exciting prospect of a 204bhp 2.5-litre V6, the IS250’s new engine has a peaky nature with maximum power requiring 6,400rpm showing on the dial and max torque hidden from view until a heady 4,800rpm. On paper at least, the IS250 hits 62mph in 8.1 seconds when matched to the six-speed manual transmission (8.4 with the auto), but that kind of performance requires much cog-stirring and an almost permanent intimacy with the redline.

The manual ‘box of the old IS200 benefited from a wonderful rifle-bolt shift action. It’s a shame this wasn’t carried over to the new car, which instead makes do with a rubbery, long-throw action, and a lever that is canted over towards the driver; those with long legs may find fifth and sixth gears lead to competition for knee space. Lexus have at least managed to banish much of the drive-line shunt that plagued the old model.

The new six-speed automatic features steering wheel-mounted paddles that hint at Lexus’ sporting aspirations for this model, but in reality their function isn’t quite as you’d expect.

The gear chosen by the driver is used only as a suggested maximum by the transmission’s brain – select third using the paddles and, despite a gear position indicator in the instrument cluster confirming your selection, the transmission may actually be in first, second or third. The system will at least allow you to hold at the redline, but will downshift for you as you slow.

The paddles would have proved useful for quick downshifts before overtaking, but as they remain inoperative with the gear selector in ‘D’ you’ll have to engage ‘M’ mode before clicking down a cog or two. Even a standard automatic requires less interaction than this, so it’s hardly the engaging alternative to a manual that Lexus would perhaps have liked.

What would suit the auto box perfectly is a torquey diesel power unit. Unfortunately, the diesel is only available as a manual.

On the face of it, the diesel should be a class-beater. Its paper figures – 175bhp, a whopping 400Nm (295lb/ft) at 2,000rpm, and 0-62mph in 8.9 seconds – suggest this 2.2-litre oil burner taken from the Toyota Avensis should be a real corker. In practice, it feels lethargic and reticent and, despite huge torque reserves, the IS220d’s power plant is unfathomably slow-revving. After the initial surge of torque at 2,000rpm, the rev counter’s needle takes an age to sweep across the remaining few thousand rpm.

To compound the issue, the 220d has been saddled with the most absurd gear ratios ever devised by man. Attempting a cruise in sixth gear at 70mph will have the engine barely ticking over at 1,500rpm; in fact, the engine is revving so low at legal motorway speeds as to be labouring quite audibly, and anything other than a completely flat motorway will require a change back down into fifth. Forget about using that famed turbo-diesel overtaking surge, as you’ll have to change down one or even two gears to achieve anything other than glacial acceleration. And don’t think the problem affects just the top end of the gearbox, either, as even fourth gear is unusable at urban speeds; a 40mph limit will see you stuck in third gear for quite some time.

We’ve yet to drive the Sport model, due in the Spring, which will feature a revised final drive ratio. We hope that addresses the issue.

The new Lexus IS range features four models – entry level, SE, SE-L and Sport. All models have enough airbags to construct an emergency bouncy castle, a slew of electronic driver aids (the torque-monster 220d Sport gets the company’s new VDIM system), automatic headlamps, keyless entry, cruise control, electrically adjustable and folding heated door mirrors, four electric windows, and alloy wheels. The £22,400 base IS250 is burdened with cloth upholstery, but the £25,400 SE adds heated and ventilated electrically adjustable leather seats as well as 17-inch alloys.

The £28,000 SE-L is set to be the model of choice, with rain sensing wipers, parking sensors, auto-dimming mirrors, electrically adjustable steering column, three-driver memory settings, power rear sunshade, illuminated scuff plates, swivelling HID headlamps with washers and wood trim.

However, add the six-speed auto (£1,000), metallic paint (£510) and the Multimedia Package (£2,710) as most buyers will want to, and you’re looking at £32,220 – nearly £1,500 more than a basic GS300.

The Sport models add alloy pedals and the Cellensia seating pack, but lose a few niceties such as the rear sunshade. The IS220d models are £200 less than their petrol equivalents.

The Lexus IS’ problem is that it’s almost too refined. Road rage is practically impossible at the helm of an IS250; you can’t help but feel soothed by its rattle-free cabin, comfortable ride and syrupy auto gearbox.

Trouble is, this is supposed to be a sporting saloon.  The previous IS200 was edgy and engaging, even down to the sound of its smooth-spinning straight-six and its snickety gearshift. The new IS feels like a smaller version of its big brother, the GS, particularly in the way it insulates you from the experience. That’s hardly surprising when you consider that’s exactly what it is: a shortened version of the GS platform.

We’d still choose an IS250 over the BMW 3 Series, but there’s a sense Lexus could have made a few tweaks here and there, to introduce more of the previous model’s sporting character. The new IS is a more complete product, with the quality buyers demand and a refreshing design. It’s a shame it doesn’t quite have the dynamic abilities to trounce its German rival, and that the diesel model is so appallingly geared. And, for the must-have spec, it’s not cheap, either.

Astonishing quality, particularly interior fit and finish, combined with an intriguing new look. Excellent ride and genuinely surprising handling, but let down by twitchy steering. IS220d saddled with absurd gearing. One-to-have IS250 SE-L with sat nav is a touch expensive. We’d still have one over a BMW 3 Series, but much of that is down to quality, reliability and dealer network.
Our verdict: Our verdict: 3.5 stars out of 5