BMW's 1 Series seems set to get some serious competition. Not only is Audi gunning for the Bavarian brand's successful entry-level variant (more here), but Lexus appears set to enter the premium small car segment.

Rumours of the pint-sized prestige model have been flying round since Frankfurt Motor Show when Toyota Motor Corporation Global Planning Chief, Tokuichi Uranishi, reportedly told a group of European media that Lexus would enter the segment. Though Uranishi denied he had made such a statement in an interview with Australian media at last week's Tokyo show, he did confirm the carmaker was considering options for a sub-IS model.

"There has been nothing decided," Uranishi told the Carsales network. "[However] There is a strong necessity to introduce [such a model]."

According to Uranishi, despite the marque's hybrid models, a small car would play an important part in lowering Lexus' overall CO2 'footprint'. It would also make a contribution to Lexus' fuel consumption signature in markets like the USA.

Closer to home, the aims for such a vehicle would not necessarily be so 'lofty'. It's sales rather than saving the world that's on local Lexus Australia chief, John Roca's agenda.

Roca says a significant volume opportunity exists for a sub-IS Lexus. Indeed he suggests that arguably a brand like Lexus lends itself to such a segment better than BMW, Audi and Mercedes.

"A vehicle that sits below the IS range would be a good opportunity for us. Something like an A3 competitor -- we wouldn't want to go much smaller than that.

"And I think that our brand would lend itself to something like that. No different to our SUVs -- with the heritage from Toyota, it's just assumed our SUVs are built well and work well. I think a small car from Lexus would be viewed the same way."

Though Lexus has offered front-wheel drive sedans in the past, more recently it has cemented its reputation thanks to well-crafted rear-wheel drive platforms. According to Roca, it would not necessarily follow that a small Lexus would, like 1 Series, be a pocket-sized rear-driver.

"I don't think it's necessary [to use rear-wheel drive]. When you go to that size vehicle, I think the market would accept either. It could be front-drive or all-wheel drive -- we believe the market would accept both."

One thing both Roca and Uranishi will confirm is that the smallest Lexus (which could conceivably be, after all, a pocket SUV -- think the rumoured Q3 or X1) is some time away.

Roca says: "We're still years away. It is something that's been discussed in theory but not in detail. I think in the next 12 months to two years the direction will become a lot clearer. There a niche in the market -- a real gap -- that we could fill quite well."

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