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LEXUS: ALL REVVED UP WITH SOMEWHERE TO GO (int'l edition)

In the U.S. market, Toyota Motor Corp.'s most dazzling performer these days is its Lexus division. It wasn't always so. Just four years ago, Lexus was skidding. After a spectacular debut that caught its European rivals asleep at the wheel, a skyrocketing yen forced Lexus to raise prices--so the cars were no longer the extraordinary value they had been at first. The flagship LS 400, introduced in 1989 at $35,000, was going for more than $50,000 by 1994. Meanwhile, BMW and Mercedes-Benz redesigned their products and cut prices. Lexus sales went into a stall.

Now, Lexus is back in gear. Its products, once criticized as bland, have new spark, with stronger engines and more feel-of-the-road for the driver. The new GS sedans, launched a year ago, are more aggressively styled. And its $32,000 RX 300 sport-utility vehicle, with the handling of a car rather than a truck, has been the division's best seller since its April launch. With sales up 57% so far this year and on track to surpass 150,000 vehicles, Lexus has zoomed past BMW and is closing in on Mercedes in U.S. sales.

EXHILARATION. While Toyota may be struggling to bring young Japanese buyers to its brand, Lexus' new GS and RX models are luring new--and younger--American buyers to the fold. Take Peter N. Giles, 41, who switched from a Jeep Grand Cherokee to the RX 300 in September. ''It seems like everyone and his brother has a Jeep. I wanted to break away from the pack,'' he says. Giles, who owns a publicity agency, also wanted the amenities of a luxury brand--such as the Nakamichi stereo he bought for his RX. Like Giles, some 65% of RX 300 buyers haven't owned a Lexus before.

With its new lineup, Lexus is trying harder to reach buyers who want more than just a smooth ride. ''We were seen as the safe, sensible choice--almost so perfect that it wasn't exciting,'' says Bryan Bergsteinsson, group vice-president of the Lexus Div. Now, Lexus is even fiddling with the longtime tag line of its TV ads, ''The Relentless Pursuit of Perfection.'' In current ads, ''perfection'' is replaced, for a few seconds, by ''exhilaration.'' To boost the exhilaration, Lexus is also readying a sporty car--a version of the Altezza--that's less expensive than its $40,000 to $50,000 GS models and that can match BMW's 3 series and Audi's A4. That should give the Germans even more reason to worry about Lexus.

By Larry Armstrong in Los Angeles



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