Compared with the LS and ES, the IS has never been much of a performer for Toyota Motor Corp.'s Lexus luxury division. The entry sport sedan at its peak sold 22,486 units (2001) and this year is dying a slow, painful death, with just 2,617 units moved in the first six months.

Next to the mighty BMW 3-Series, which tallied 48,953 units in the same period, the IS has been a dud. Still, company officials say it brought a younger demographic into the brand, with an average buyer age of 29.

Now, with the '06 IS poised to launch in October, Lexus says it expects a whopping 600% annual sales hike. That expectation at first appears to be an exaggeration, but this is the same company that called for quadrupling sales of its perennially underperforming GS midsize sport sedan — and is meeting that target.

Lexus has its work cut out. Just as there is an all-new IS, there is a new 3-Series, which by almost all reviews is a stellar offering, unlikely to cede its place at the top of the lower luxury segment anytime soon.

For the new IS, Lexus dumps the poorly selling SportCross hatch and wagon variants worldwide. It now offers three trims in the U.S.: the IS 250, IS 250 all-wheel drive and IS 350, indicating a new lineup of 2.5L and 3.5L gasoline V-6s (Europe gets a diesel).

The IS 250 with rear-wheel drive comes standard with a new 6-speed manual transmission. There are three new automatics. They include a compact 6-speed optional for the IS 250 RWD, a 6-speed unit for the IS 350 that is shared with the GS 430 and a different 6-speed automatic for the IS 250 AWD.

All automatics have what Lexus calls multi-mode sport shifting, allowing drivers to change gears via a gated pattern for the floor-located lever, or with paddle shifters behind the steering wheel.

The two V-6s are new and packed with technology, including the powertrain sector's fastest-moving new technology, direct gasoline injection (DGI).

The 3.5L V-6 (2GR-FSE for Toyota engine-code fanatics) is the engine that also should power the new GS midsizer, as it cranks out an eye-opening 306 hp vs. the 245 hp coming from the GS' port-injected 3L DOHC V-6.

Thank the unique DGI technology for a lot of that thrust. For the 3.5L V-6, Toyota unashamedly calls it the “most advanced direct-injection system on the market.”

In addition to the conventional DGI layout that places the primary fuel injection in the cylinder, Toyota's new system adds a supplementary fuel injector in each intake port. Yes, the engine employs both direct and indirect injection.

Toyota engineers say the design generates ideal air/fuel mixture formation for any given driving condition. Optimizing the mixture composition, they say, boosts power, cuts fuel consumption and reduces emissions.

The 306 horses propel this engine to the front of an already potent pack of new V-6s from Japan, surpassing the 300-hp ratings for top variants of Honda and Nissan 3.5L mills.

Lexus says the IS exists as the sportiest of its sedans. Unlike its European rivals, its “entry” sport sedan gets demonstrably more power than its larger, costlier stablemates. Lexus expects about 20% of buyers to opt for the 3.5L model. But after test-drives here, that expectation may be too low, as the 2.5L DOHC V-6 in the IS 250 models churns out just 204 hp.

Although the 2.5L uses only direct injection to produce adequate punch — particularly if one liberally exercises the paddle shifters — 102 hp between the two engines will be hard for today's horsepower-hungry consumers to ignore.

Not only is it unlikely 80% of buyers will be satisfied with the 2.5L's 204-hp output, the base engine actually represents a power regression: The outgoing IS' 3L DOHC inline 6-cyl. makes 215 hp.

Lexus may be expecting a disproportionate take rate for the IS 250 because it offers AWD, a second for the brand (the '06 GS was the first Lexus car to offer AWD).

While it is true buyers in the northern climates tend to favor the feature to facilitate getting around, the lure of an extra 102 horses may mean those in intemperate regions go for the IS 350 and simply get friendly with snow tires.

In both city and highway driving, the IS is competent and downright nimble. It has remained on the compact side and not added many inches in any direction.

Just 2.4 ins. (6 cm) are added to the wheelbase vs. the previous generation.

Curb weight tops out at 3,651 lbs. (1,590 kg) for the IS 250 with AWD and automatic tranny. The previous-generation IS 300 weighed 3,255 lbs. (1,418 kg).

However, in its constant quest to improve, Toyota may have gone a bit too far with the new IS. Some of the sharpness of the outgoing model is lost.

Even so, body roll is virtually non-existent, except for the most extreme cornering maneuvers, and the ride is the epitome of supple. Although that usually is a good thing, the small cadre of IS loyalists may view the jostling endured by occupants in the old model as a sign design priorities focused on refinement.

Toyota has redesigned the front double-wishbone suspension, a layout typically thought to reflect an emphasis on sportiness, to add additional strength and stability, as well as reduce noise, vibration and harshness. Derived from the GS, the revised suspension is 0.79 ins. (20 mm) shorter in the IS due to its lower hood line. The vehicle's rear multi-link suspension arrangement replaces the outgoing IS' double-wishbone design.

Acceleration, Lexus gloats, is a best-in-class 5.6 seconds from 0-60 mph (97 km/h) for the IS 350, while the 2.3 seconds added to the IS 250 models reflects the detrimental effects of less power and more weight.

Vehicle Stability Control is standard on the 250. The 350 gets, as did the GS 430, Lexus' fancy new Vehicle Dynamics Integrated Management (VDIM), which combines VSC with antilock brakes, electronic brake distribution, electronic power steering, brake assist and traction control.

Adaptive cruise control is optional on automatic-transmission vehicles. Unlike the GS, it does not enjoy electronically controlled braking.

There are airbags aplenty in the IS, including a first-ever application of a twin-chamber bag on the front passenger side. The unique design means instead of “taking it on the chin,” passengers will feel the greatest impact from the airbag in the chest/shoulder region.

Also inside, the IS has a navigation system, which, upon testing here, could use a bit of work. It took 10 minutes to dope out the procedure to scroll the map.

Another gadget worth noting is a smog sensor, which can spare passengers from odoriferous emanations coming from another vehicle, as well as anything or anyone in the environment outside their car by automatically sealing off fresh-air intake.

Styling, both exterior and interior, is striking. The IS wears the new Lexus design language, L-Finesse, better than the plumpish new GS.

The high beltline and muscular look is more natural and less forced on the smaller IS.

Inside, materials are of the utmost quality. Especially fetching is the headliner fabric, known only at this point as “Lexus material,” which is a faux suede the auto maker says it plans to use in the next-generation, lux-oriented ES and LS sedans.

Pricing for the IS will be announced in September in advance of its mid-October on-sale date. Company officials promise a competitively priced entry, meaning a sub-$30,000 starting point for the IS 250.

As for the competition, BMW likely will retain its core customers, although a few may stray. But other sport sedans in the IS' gun sight — namely Infiniti's successful G35 — may see their market share drop.

The G35 is the third best-selling vehicle in the lower luxury segment, calendar year-to-date, according to Ward's data.

But relatively speaking, it is a bit long in the tooth, having debuted in 2002 as an '03 model and not scheduled for a redo anytime soon.

'06 Lexus IS 350

Vehicle type: Front-engine, rear-wheel drive, 5-passenger 4-door sedan

Engine: 3.5L (3,456 cc) DOHC V-6, aluminum block/aluminum heads

Power (SAE net): 306 hp @ 6,400 rpm

Torque: 277 lb.-ft. (376 Nm) @ 4,800 rpm

Compression ratio: 11.8:1

Bore × stroke (mm): 94 × 83

Transmission: 6-speed automatic

Wheelbase: 107.5 ins. (273 cm)

Overall length: 180.1 ins. (457 cm)

Overall width: 70.9 ins. (180 cm)

Overall height: 56.1 ins. (142 cm)

Curb weight: 3,527 lbs. (1,601 kg)

EPA fuel economy, city/highway (mpg): 21/28

Market competition: Acura TL; Audi A4; BMW 3-Series; Cadillac CTS; Infiniti G35; Mercedes-Benz C-Class; Volvo S40