Lexus has traditionally struggled for sales in the premium compact saloon sector, against its talented rivals the BMW 3-series and Audi A4. With the new generation Lexus is hoping to tempt buyers away from diesels by offering similar power, impressive emissions and fuel economy with a petrol-electric hybrid. We headed to Vienna to find out if the Germans should be worried.

What is it?

The third iteration of Lexus’s smallest saloon offering comes with just two engine options: the 2.5-litre V6 IS250 and the hybrid 2.5-litre IS300h as tested here. Both are offered with automatic gearboxes only and come in four different trim levels, with the F Sport model we tested coming complete with different suspension and revised bodywork for a more athletic feel. The IS300h offers impressive fuel economy and CO2 emissions given the 220bhp on offer, and will dip under the 100g/km threshold for free road tax, provided you opt for the right trim.

What is it like to drive?

Despite Lexus’ engineers aiming to increase driver involvement with the new IS, the company’s long-established qualities of refinement and comfort remain at the fore. The cabin is hushed, even at speed where only a quiet backdrop of road noise spoils the tranquility. Despite the F Sport model’s firmer suspension, ride comfort is also commendable, making the IS a fantastic place to spend time on long journeys.

However, to compete with the German offerings, the Lexus needs to offer more to the keen driver. Thankfully the IS doesn’t fall short, remaining engaging no matter how demanding the road gets, and with enough of a rear-wheel drive balance to remind you that you’re driving something a tad more special than a Toyota Avensis.

The only fly in the ointment is the CVT gearbox fitted to hybrid models. Mooching around town, most drivers are unlikely to distinguish its behaviour from that of a conventional automatic, but press the engine for more and it blares with an unsatisfying drone, as the gearbox keeps you at optimum revs. Lexus has manufactured in artificial ‘gears’ so drivers can change manually via the steering wheel-mounted paddles, but the engineers admit it’s just a toy, which doesn’t offer the control of a regular paddle-shift auto.

What is it like inside?

As ever with Lexus, standard equipment is generous, so you won’t feel short changed if you opt for a cheaper version. All models are fitted with cruise control, dual-zone climate control, automatic headlamps, keyless go, and DAB digital radio and Bluetooth connectivity which are operated via a seven-inch remote controlled multimedia screen.

Passengers front and rear are well catered for with ample leg, shoulder and headroom, while the seats not only look great, but are also very comfortable even after hours at the wheel.

The cabin itself is very well constructed, with a solid feel to all the surfaces, even lower down the centre console – an area where many manufacturers fit scratchier plastics. Some of the buttons are carried over from cheaper Toyota models, which spoils the ambience a tad, but overall the IS’s interior is very high quality and easily the equal of its premium German rivals.

Is it practical?

Being a saloon, the IS is limited as to the size and shape of objects the boot will accept. Happily, the rear seats can be folded down to accommodate longer items.

The additional battery pack of the IS300h hasn’t harmed boot space unduly either, being just a small rucksack (30 litres) down on the IS250, at 450 litres. It is also comparable to the BMW 3-series and Audi A4 saloons, which both offer a load space of 480 litres.

Unfortunately, unlike almost all of its rivals, the IS won’t be offered in an estate body, meaning those with dogs, or that regularly load bulky items will need to look elsewhere. Sun seekers rejoice, however, as Lexus has confirmed that a convertible version will eventually be released, along with a sporty two-door coupe model.

Should I buy one?

The Lexus IS300h presents a compelling option in the compact premium executive market, by offering hybrid technology, frugality and low emissions at a price point to compete with rival diesel offerings that are so popular in the UK. If you’ve ever fancied a hybrid but have been put off by comparatively high prices, the IS300h is worth a look, as though it starts from £29,495, it offers the same premium experience as the rest of the cars in the sector, with a striking dash of Japanese styling that’s sure to get you noticed.

Don't want to buy new? You can browse for a used Lexus IS in our classifieds here.

The facts

Lexus IS 300h F Sport

List price: £33,495
Engine: 2.5-litre, four cylinder petrol, electric motor
Power: 220bhp
Top speed: 125mph
0-62mph: 8.3 seconds
Fuel economy: 57.6mpg (urban), 57.6mpg (extra-urban) 60.1mpg (combined)
Emissions: 109g/km CO2
Euro NCAP rating: Not yet tested