SALZBURG – It might have been too obvious if Toyota Motor Corp.’s luxury division held its press preview for the fourth-generation Lexus LS 460 sedan in the industrial city of Stuttgart, home of arch-rival DaimlerChrysler AG’s luxury car division, Mercedes-Benz.

Instead, the Lexus event is staged in this venerable city, which is just 189 miles (302 km) from Mercedes’ headquarters; close enough to get the point across. The ’07 LS 460 flagship is intended to make waves in the marketplace and take aim at the competition, especially Mercedes.

Moreover, Lexus executives say holding the preview in Austria shows the Japanese luxury car maker’s determination to increase its global presence – including, ironically on its home turf, Japan, a market Lexus entered only last year, where it faces a fair amount of competition from, yes, Mercedes, as well as BMW AG. Before then, Lexus was sold under the Toyota brand name in Japan.

The new top-of-the-line LS 460 sedan is intended to move the Lexus brand further upmarket to the high-end prestige segment, where vehicle prices start at about $70,000.

“Mercedes still enjoys the cache of being the luxury car,” Chris Hostetter, Toyota’s vice president-advanced product strategy, tells Ward’s. “When you see celebrities arriving at a red-carpet event, they’re usually driving a Mercedes, not a Lexus. We’d like to change that.”

Lexus debuted in the U.S. 17 years ago, positioned as a brand appealing to “new-value” buyers generally less interested in status and more concerned with quality, dependability and comfort, says Hostetter. “That appealed to a lot of women buyers at a time when luxury cars were defined by their large size.”

Lexus leads the mainstream luxury segment, part of an overall premium market that accounts for 1.9 million unit sales in the U.S.

“The high-end prestige luxury market, piloted by Mercedes, is much smaller at 100,000 vehicles, but sales are highly profitable and have doubled in five years,” says Lexus Group Vice President Bob Carter.

Yet it is more than just going after higher profits, Carter says. Lexus learned that by interviewing executives from European prestige brands, such as Louis Vuitton, Gucci and Prada.

“We discovered that these luxury icons make exceptionally high-end products to build their image and then rely on mainstream luxury items for the bulk of their business,” says Carter.

“The secret of success is setting the bar extremely high for prestige customers, and that’s what we plan to do with Lexus and the all new LS models, including the LS 600h hybrid,” which debuts in spring of 2007 as an ’08 model after the LS 460 goes on sale in October.

The LS 460 will come in a standard-wheelbase model, but also, for the first time, in a long-wheelbase version. That’s intended to appeal to LS owners looking to move up and owners of competitive vehicles looking to move over, says Carter.

He says a marketing campaign – aimed at affluent and influential consumers dubbed “affluentials” – will tout ’07 LS “firsts,” such as an 8-speed automatic transmission and body temperature-sensing climate control.

Detractors might question the need for an 8-speed transmission. But Lexus executives point out that it one-ups the 7-speed transmission on the Mercedes S500.

“I spent 17 of my 28 years with this company engineering transmissions, so you could say I have been working towards this development for quite a long time,” LS 460 Chief Engineer Satoru Maruyamano says of the 8-speed innovation.

Upcoming ads for the car will close with the tagline, “The Pursuit of Perfection.” What went into styling the headlamps is one example of that quest, says Carter.

Designers wanted crystal-like properties to the projector front lights. So an engineer used the base of a Baccarat glass as an inspiration. But when the lens diameter was increased, the crystalline appearance decreased, making it apparent the lens was of a resin material.

“To better understand the properties of a ‘crystal’ lens, the chief engineer and his team actually made a headlamp out of crystal,” says Carter. “Data was gathered on everything from transparency and the refractive index of light, to surface roughness.”

Based on that information, a new lens was molded and hand polished and “the inherent look of crystal was reproduced,” says Carter.

Such exacting efforts explain why the vehicle’s product development took more than four years. That’s a relatively long time in an age where some vehicles can be fully developed in only a year, notes Takeshi Yoshida, managing officer of Lexus research and development.

A long-term thinker, Yoshida tells Ward’s he’s mapping automotive concepts 20 years out, using the guideposts of safety, environmental friendliness and driving enjoyment.

“It’s fun to imagine and think of the future,” he says. He notes that some day innovative features on the LS 460 will be on more affordable Toyotas. But for now, wealth has its privileges.

The current average transactional price of the LS 430 predecessor is $62,000-$63,000 – $73,000 fully optioned. Pricing has not been announced for the LS 460.

The new car features a new and bigger 4.6L V-8 engine with 380 hp, 102 hp more than its 4.3L predecessor. Even so, the LS 460 has the fuel economy of a 3.5L engine, Lexus powertrain engineers say.

Maruyamano says Lexus established new inspection procedures for balancing the engine and tuning its note at the Tahara plant in Japan.

In a factory inspection booth, a technician “conducts an examination of the engine prior to its installation and makes a final sound check by his trained ear,” says Maruyamano.

Psychoacoustics played an important role in the development of the LS 460. For instance, engineers researched different tones created by opening and closing various doors, says Maruyamano. “We discovered the sound closest to what we were listening for was that of solid, heavy wood-crafted doors.” So, that’s what they went for.

The car’s exterior styling is the latest rendition (following ES, GS and IS sedans) of a new styling philosophy called L-finesse, which attempts to contrast simplicity and elegance.

A primary design detail is the repeated use of an unequal-sided triangle, or arrowhead shape, at the grill ends and the back and front sections of the window trim.

“It is a subtle and unique visual effect that is easy to take for granted until one begins to recognize how the lines flow from the arrowhead shape, fluidly tying the design together,” says the car’s chief designer, Yo Hiruta.

“The Japanese way is to be elegant, understated, simple and interesting.”

To accentuate the styling, special attention is given to the car’s paint finish. In the past, buffing robots at the plant only moved in two directions, up and down. Now there are 6-axis buffing robots with 3-dimensional movements. It took six months to get that right, says Maruyamano.

The LS 460 has the most airbags in its class (eight standard, 11 when equipped with the executive-class 4-seat package).

Carter predicts LS 460 sales of about 30,000 annually in the U.S. Buyers are expected to include current LS owners as well as midsize luxury sedan owners.

Less than 30% of deliveries will be the long-wheelbase version, but it remains important to the mix because it “pushes LS up into the prestige luxury segment,” says Carter.

“Generally we expect the new LS 460 buyers to be younger and more affluent, and more will be male than the current-generation LS buyer,” he says.

So what’s not to like in the car, considering all that painstakingly went into it? Power delivery is instantaneous. Handling is nimble for a 4,245 lbs. (1,849 kg) car. The 8-speed transmission doesn’t take a deep breath when displaying its wide range.

The cabin is plush, without being cushy. The interior is quiet, without feeling like a sensory-deprivation tank. The craftsmanship is impeccable.

A clever but dubious option is an advanced parking-guidance system. When programmed, by setting coordinates on the navigation screen to “target” a parking space, the vehicle parallel parks on its own, a talent many drivers have failed to master.

But the system is hardly intuitive. Every parking maneuver needs to be set up, and that’s relatively time consuming, especially if a driver is holding up traffic while pushing navigation-screen buttons. Perhaps it comes easier with practice. But it might be less complicated for a driver to learn how to parallel park.

sfinlay@wardsauto.com