SANTA BARBARA - Every region has its favorite vehicle. New York City: the yellow cab. Texas: the great American pickup truck. For Southern California it's the BMW 3-series.

More than just popular, the hallowed "everyman's" Beemer model is ubiquitous in any day's typical California traffic jam. How these young and stylish drivers differentiate their 3-series from those of the other upwardly mobile truly is anyone's guess.

So what better place than Southern California - BMW turf - to look the Bavarians square in the eye and issue a challenge? Toyota Motor Corp.'s Lexus Div. flings down the gauntlet in the form of its new IS 300.

Lexus engineers unashamedly name the 3-series - with a passing mention of the Audi A4 - as their only competition. Who could blame them? The 3-series for decades has been transcendental: a "brand package" that every automaker would love to emulate. All of BMW in one zippy, gotta-have-it package.

The comparison is not wishful thinking, and it is not superficial. Just as Lexus officials are far from bashful about drawing parallels between their product and BMW's 328i, neither are they shy about imitating what works for BMW.

The IS 300's soul resides in a DOHC 3L inline 6-cyl. engine. The gloriously smooth inline-six format, we don't have to remind you, is BMW's part and parcel.

The Lexus I-6, which churns out 215 hp at 5,800 rpm and peaks in torque at 218 lb.-ft. (296 Nm) at 3,800 rpm, is based on that found in Lexus' larger, slightly more luxury-oriented GS 300 sport sedan.

BMW's equivalent 3-series DOHC I-6, at 2.8L, produces 193 hp at 5,500 rpm and 206 lb.-ft. (279 Nm) of torque at 3,500 rpm; the Audi A4's twin-cam 2.8L V-6 musters 190 hp and 207 lb.-ft. (281 Nm) of torque. Although the IS 300 whips both competitors in horses, you can see there's little to differentiate between the three in power specification.

The three cars' basic dimensions, too, practically could be photocopies: their curb weights, for example, differ only by 14 lbs. (6.4 kg), with the IS 300 the heaviest at 3,270 lbs. (1,483 kg).

The IS 300 may be the heaviest of these welterweights, but still is one fast car. The Lexus' slightly stronger power-to-weight ratio makes it a hair quicker off the blocks than its competitors, cutting 0-to-60 mph (0-to-97 km/h) in 7.1 seconds, a tenth of a second faster than the 328i and significantly faster than the A4, which does the run in 8.4 seconds.

For the first year of production, the IS 300's sparkling I-6 must power the rear wheels via a 5-speed automatic transmission only - albeit a good automatic - incorporating Lexus' "E-shift" sequential shifting function that features steering-wheel mounted selection buttons just like the GS sedans.

True performance aficionados will wait, then, until the '02 model year, when Lexus will offer the option of the manual transmission the IS 300 so deserves. The IS 300 will come with 5-speed self-shifter, not the tight 6-speed manual fitted in the IS 200, a smaller-engine version for Europe and Japan (in Japan, it's called the Altezza).

Nobody's happier about this than IS 300 chief engineer Nobuaki Katayama, who spent 18 years as an engineer on Toyota's standard transmission team. Mr. Katayama apologizes for the initial unavailability of a manual IS 300 for North America. From the beginning, apparently, he knew what the marketers always seem to miss: Offering a manual transmission is a crucial performance "credential" when you've set your sights on the world's most revered sport sedan.

The IS 300 begs for a manual gearbox. Its compact size makes for a nimble and tight drive. The engine is centered well behind the front axle, placed so for more responsive handling. Four-wheel independent double-wishbone suspension delivers the same sort of nip-and-tuck cornering one expects of the 3-series.

So if you can forgive Lexus about the automatic-only foible, dynamically the IS 300 is the full equal of its competition. The next mostimportant question: How does it look? The exterior is crisp and taut, with short overhangs and sharp lines - although it's probably one rung shy of innovative, and, of course, can proffer none of the design heritage that makes a 3-series so instantly recognizable. Lexus hopes to make up ground by making the IS 300 its first model ever offered in bright, look-at-me yellow.

The interior design, however, is a bit more assertive. The centerpiece of the instrument panel is a chronograph-style, sports-watch-inspired gauge cluster. Sitting within the speedometer are gauges for coolant temperature, battery level and average fuel consumption. Other nice interior touches include combination leather/suede seats, a chrome ball gearshift and ultra-cool drilled aluminum pedals.

Sitting in the driver's seat, Lexus believes, will be an entirely new breed of Lexus driver. These drivers will be affluent, primarily male, in the 25 to 40 age group, and techno-savvy and performance-oriented. Lexus believes there will be little cannibalization of their other entry-level vehicle, the ES 300 sedan. The ES 300, Lexus says, will continue to cater to younger customers who prefer an elegant style, a quiet ride - and front-wheel drive.

"This customer has never entered a Lexus dealer before," says Lexus general manager Bryan Bergsteinsson. He says the IS 300 customer probably drove past the Lexus dealer on his way to buy an Acura Integra or, you guessed it, a BMW.

Just to make it more interesting, the IS 300 hits the market next month, strutting a base price in the $30,000 range, perhaps undercutting the 2.8L-powered 3-series by a couple thousand bucks.

Used to be, you just didn't even attempt it. In the 3-series, BMW owned the compact sport sedan franchise and every other automaker satisfied itself by nibbling at the crumbs. A powerful brand and an unassailable design meant that the Three had no genuine competition.

Mercedes-Benz's C-Class has its own enviable spin on the "brand" part of the equation, but despite rear-wheel drive, Mercedes-Benz always has tuned the C-Class more for solidity than vivacity. (At least until now, see p.147).

The U.S. automakers never could distill the essence of what makes the Three so special; any number of dismal attempts to copy it (Cadillac's Catera being the most recent, its Cimarron the most nefarious) lay testimony to Detroit's persistent non-knowledge of how to make a prestige compact sedan. The Japanese are better equipped to intellectually align with the Three - and enjoy the technical wherewithal to design a capable threat - yet like the Detroiters, were lastingly distracted by front-wheel drive.

So what's changed? First, the Japanese automakers acknowledged that rear-wheel drive is obligatory in prestige/sport segments. The 1990 Lexus LS400 and Infiniti Q45 signaled Japan's reversal, rocking Mercedes and BMW at their foundations.

Second, BMW has slipped. The latest-generation 3-series (E46), launched for the '99 model year, is good. Too good for its own good, you might say.

Larger, heavier and more refined, the new Three is improved, yet less focused. The "edge" of the previous two generations has been homogenized into a car that smothers all the intimacies that created the Three mythos in the first place: boisterous, rorty engine notes, firm no-nonsense suspension and intimate, businesslike occupant quarters.

Now the Three is more about isolation and comfort and reduced stress. Anyone would welcome its roomier accommodations, warmer, less severe dash (with vastly better materials) and unflappable chassis. But in the all-holy name of refinement, did we have to lose the signature transmission whine, the razor's-edge throttle and occasionally tail-happy handling?

That the Three is selling in record numbers, both in the U.S. and abroad, appears to vindicate BMW's development goals. But it's a slippery slope from satisfying cell-phoning poseurs to becoming a full-fledged Buick. And the fact that the average age of BMW owners is climbing alarmingly should be setting off the air-raid alarms at the Motor Works of Bavaria.

Some bystanders - myself included - believe the new Three's direction represents a chink in BMW's armor; Lexus has run out a car to exploit it. Britain's Car magazine says the European IS 200 is better than the current 3-series, "better" meaning an almost exact copy of the "old" Three - more of a "pure" driver's car.

Once Lexus fixes the IS 300's unconscionable automatic-only blunder, BMW will need a quick answer (beyond fitting a new, IS 300-beating 225-hp 3L engine), as it seems to have misplaced its definition of what makes a 3-series a 3-series.