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After much speculation, Lexus has hatched its sporty new IS 300, a compact sedan that takes direct aim at BMW’s popular 3-Series. And does it so well.

Fast and tight, unruffled over uneven surfaces with cornering like a sports car, the IS 300 is a credible competitor for BMW’s acclaimed small sedans, doing its rendition of the Ultimate Driving Machine with style and aplomb.

In profile, the IS is nearly identical to the 3-Series sedans, though slightly smaller. The front aspect carries an unmistakable Lexus family resemblance, and the rear looks like a customized Japanese pocket rocket.

All new for 2001, the IS 300 is designed to do what Lexus has done from its inception: take an existing concept and go after it with a high-quality replacement at a lesser price. This was the plan behind the big LS 400 sedan introduced in 1989 with styling and engineering similar to the Mercedes-Benz 400E.

Mercedes scoffed at the audacity until Lexus began eating the German’s lunch. Now, Lexus is an established luxury marque with a full range of desirable products.

No one’s scoffing this time. IS 300’s vital statistics sound like those of a Germanic thoroughbred: rear-wheel-drive, a tightly controlled chassis and tuned suspension, and power from a 215-horsepower inline-6. The engine came from Lexus’ bigger GS 300 sport sedan.

The IS is similar to the GS cars, including the frenetic V-8-powered GS 400. The GS cars showed that Lexus cars are not just quiet rides and soft suspensions, but that the Toyota luxury division can build road rockets as well.

Being smaller, the IS is faster than the GS with the same engine. Lexus says the little sedan will hit 60 in just over seven seconds.

For its first year, 25,000 IS 300s will be built in one flavor only, equipped with an automatic transmission that can be shifted manually with buttons on the steering wheel. This works well enough, though many members of the target audience will undoubtedly favor a stick shift and will either shop elsewhere, such as BMW or Audi A4, or wait until next year, when a manual will be available.

The automatic is also a bit soft for this sporty number, shifting smoothly and predictably, but without the desirable snap.

Handling on the IS 300 is first-rate, the kind of “on rails” cornering made famous by the German automakers. The compact shines in every kind of driving condition, from curving, winding roads to high-speed freeway cruising. According to Lexus, the IS 300 was tested again and again on European roads, even taking laps at Germany’s famed Nurburgring race track. It shows.

The interior of the IS is likewise solid and sporting, with highly supportive seats and a businesslike look to the gauges and controls. The pedals are racy-looking aluminum castings instead of black rubber. Though the cabin is narrow, the front seats are plenty roomy. Not so in the back, where passengers wi ll find legroom and headroom in short supply.

The driver’s gauge cluster is distinctively styled with a large circular speedometer in the center with coolant, battery and fuel gauges set within the circle, in a style that emulates sport watches. The tachometer is nestled into the side of the speedometer.

The test car was a pre-production model, but still solid and rattle-free. Pricing starts at $30,500, and options include a luxury leather package with power seats and wood accents, $1,805; power moon-roof $1,000; limited-slip differential, $390, and graphite polished wheels, $400.

A sparkling, enjoyable sedan, and a welcome addition to the fraternity of premium sports compacts, the IS 300 should rage with popularity.

2001 Lexis IS 300

Vehicle type: Five-passenger, four-door sedan, rear-wheel drive.

Base price: $30,500.

Price as tested: $34,495.

Engine: 3-liter inline-6, 215 hp at 5,800 rpm, 218 lb-ft. of torque at 3,800 rpm.

Transmission: Five-speed automatic.

Curb weight: 3,270 lbs.

Wheelbase: 105.1 inches.

EPA mileage: 18 city, 23 highway.

Highs:
Sparkling performance.
Agile handling.
Reasonable price.

Lows:
Slushy automatic.
Tight rear seat.
Copycat BMW profile.