First impressions were promising. A row of gleaming Lexi(?) parked in the winter sun outside Rome's Fiumicino airport all neat proportioning, grown up detailing, and purposeful stance. Looking for all the world like a Lexus GS that had been to the gym every day for six months, the IS 220d is going to sell on looks alone. Know that. BMW certainly will because this car has its sights firmly targeted on their 320d. For a good proportion of buyers, the Lexus has the Bavarian's measure.

I'm often asked whether car A or car B is better and the answer, inevitably, is 'it depends'. Whether you'll take the Lexus or the Beemer is contingent on all manner of criteria but let's just say for the time being that if you want a polished ownership experience with all the bells and whistles, shop Japanese. Those more interested in wringing the chassis engineering genius out of the last tenth of the handling envelope will be better off buying BMW.

From here on in it gets a little trickier. The defining feature of this car, namely its diesel engine, also happens to be the weakest aspect of its character. While the 177bhp 2.2-litre four-pot engine makes a marvellous addition to a Toyota Corolla Verso, the stakes are a little higher in the compact executive class and this engine just isn't as good as the oil burners found in rival BMW, Mercedes and Audi models. Lexus has built its corporate identity around peerless refinement and this turbo diesel is markedly more sibilant than its Teutonic counterparts. It also lacks the fabulous torque on demand qualities of the best engines. Wind it up and it does deliver adequate go, but it only serves to highlight the IS's paradox. You can either buy an IS that's quick but loud - this one - or opt for the petrol IS250 which isn't loud but nor does it feel particularly quick.

On paper, the diesel engine appears to tick all of the boxes. It's economical and low on emissions and will doubtless be a darling of corporate buyers, with its affordable upfront price and huge host of gadgets that serve to plump up residual values, making leasing rates look very attractive. Some may feel I'm being a little harsh on this, Lexus' first crack at the diesel market, but it has to be judged fair and square against the best, and in the powerplant department at least, the IS 220d comes up wanting.

"For their first diesel, the IS 220d is a class act, but any compact executive contender gets judged against some very tough criteria"

Other aspects of the driving experience are a mixed bag. The six-speed manual gearbox isn't particularly delightful, being quite long and heavy in the throw, but the pedals are beautifully weighted, the brake pedal in particular being one of the best in the business with a supremely reassuring feel. The driving position is also excellent with great all round visibility helped by big, bright door mirrors. They create some wind noise at above 80mph but the field of view is the best I've come across.

The ride on the standard 17-inch alloy wheels and suspension set up is also very good, even the scabbiest Italian mountain roads failing to break the car's composure. The steering is quick and accurate and the on-limit handling, as defined by the VDIM stability control system, is benign in the extreme. This system is a vast improvement over the old VSC stability control system, allowing a little more wheelspin but intervening earlier and less obtrusively when it detects the car getting a little out of shape. What's even more interesting is that whereas traditional stability control systems just nip at the brakes to keep things in check, VDIM manages brakes, throttle and even steering, adding a couple of degrees of counter steer crucially early in the event of a slide. Power out of a wet mountain hairpin with the engine right in the meat of the torque and you'll feel a mild muting of throttle response and a spot a flashing light on the fascia. No drama, no temptation to counter steer yourself (something that can royally confuse some stability control systems) and a rapid reapplication of full power once the car detects it's pointing in the right direction. Top marks.

The interior is an object lesson in how to make complex systems intuitive to access and operate. It's here that Lexus scores its most decisive victory over the BMW 3 Series. The satellite navigation, audio and ventilation systems are all simple to use. Try changing the stereo's bass and treble on a BMW fitted with iDrive. If you can do it within twenty minutes of starting out, without recourse to a manual, mind, you're doing better than me and I've got a degree in IT. In the IS 220d, you'll figure it out within ten seconds the first time and the same goes for even the more complex functions.

The second biggest advantage the Lexus scores comes in after sales service. Here the company is second to none and Lexus dealers monotonously rate as having the best service offering year after year. Judging by other Lexus products, it's doubtful you'll see much of them other than for routine servicing as again Lexus trounces all German rivals when it comes to economy.

The Lexus IS220d is a hard car to pronounce judgement on. Part of me feels that it represents a missed opportunity to establish a class lead but another part feels that the deficiencies of the slightly sub-par powerplant are wholly outweighed by the manifold levels of excellence that permeate the rest of the vehicle. This car is steeped in build and design integrity and an unswaying focus on how we use our cars. Perhaps it's this unstinting excellence of virtually every other aspect of the car that throws the engine's shortcomings into focus. If that's a back handed compliment borne from the expectation that a modern Lexus now generates, so be it.