Good: serene comfort, high quality, well-priced

Not so good: CVT gearbox, no diesel option, leather not standard

I'm going to deal with the big white elephant in the corner of the Lexus showroom first: there is not now and no intention in the future to offer the new Lexus IS with a diesel engine. The luxury arm of Toyota reckons it has all bases covered with its petrol-electric hybrid powertrain. So, if a current BMW 3 Series driver pops in for a closer look (no doubt tempted by the IS's alluring new design), the Lexus salesman will have his work cut out for him. I imagine the conversation could go something like this:

Mr BMW: "I love the look of this new IS. How much is the diesel one?"

Lexus salesman: "There isn't a diesel model sir, but have you seen the low tax and..."

Mr BMW: "No diesel? Seriously? What size engine is in this?"

Lexus salesman: "It's a 2.5-litre four-cylinder unit hooked up to an electric..."

Mr BMW: "Two point five?!"

Lexus salesman: "Have you sat inside sir?"

All jokes aside, the Irish car buyer is only just getting over his obsession with engine size, and now he firmly believes that he must drive a diesel car (despite our best efforts). To offer a rival to the top-selling Audi A4 and BMW 3 Series and not include a diesel engine in the line-up is brave to say the least.

Nonetheless, our fictitious buyer would do well to sit into the IS 300h, as this car has a lot to offer those willing to put their preconceptions to one side. The cabin is a good place to start. It's nothing short of exceptional. While Audi and BMW both make high quality interiors, Lexus goes further again with a truly interesting style, as well as the use of exceptionally tactile materials and switchgear. It's full of little details to explore, like the touch-sensitive temperature switch for the climate control and the seamlessly altering clock faces in the instruments when you go from Eco to Sport mode.

It's not perfect though: the infotainment, while easy to operate via a new iDrive-like controller, is slow to react, and if we're reading the specification sheets right on www.lexus.ie then leather isn't standard until higher up the price range. Also, rear legroom isn't anything to write home about.

However, the stereo sounds great and once out on the road the world seems distinctly far away such is the level of insulation and noise suppression. Indeed, at low speeds the IS 300h is much quieter and more refined than anything its German counterparts can muster. This makes it a relaxing car to cruise on the motorway in or around town. It can run in pure electric mode for short bursts too, which we like.

Can you sense the big 'but'? Put your foot down for more power (there's ample on tap after all, up to 223hp with the engine and electric motor working together) and the engine revs flair without any direct correlation to forward propulsion. This is a symptom of the CVT (Continuously Variable Transmission) gearbox design and, while the 2.5-litre four-cylinder engine is smooth and relatively quiet at high revs, it's the disparity between the noise and acceleration that we don't like. Buyers that always go for a manual gearbox won't like this one bit; buyers that prefer an automatic may not mind.

On the move, the IS is quite accomplished, with great body control, mature damping and good bump absorption. Personally, I'd want to feel closer to what's going on at road level, but I'm not sure that matters to many of Lexus' target buyers.

Quality and refinement aren't the only aces up the IS 300h's sleeve. It's also surprisingly well priced. The entry-level model (with emissions of just 99g/km) is €37,780, which compares favourably with BMW's entry-level diesel 3 Series, the 318d, though the Lexus is considerably more powerful for that. The S-Design version we tested emits 103g/km, so annual tax is low and it comes with an official combined economy figure of 64.2mpg. Saying that, I averaged just 35.3mpg (8.0 litres/100km) in my week with the car. Admittedly I didn't do any long motorway stint, but still...

In summary, knowing about the lack of a diesel engine option and the inclusion of the CVT gearbox, I expected to dislike this Lexus. I am an unashamed fan of the current BMW 3 Series, how it drives and the vast model range. However, I came away from the Lexus impressed. It holds a lot of appeal, from its stunning exterior and interior design to the high sense of quality and the relaxing driving experience. The fact that it's well priced and quite quick for that price is a bonus. For buyers that take on that white elephant in the corner they'll come away rewarded.