Lexus will launch a small car to compete with the BMW 1-series and Audi A3 Sportback in Europe from 2008, reported Automobilwoche.
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The Lexus BS will be based on the IS250 platform.
At launch, engines will be a 2.5 litre V6 with 208 horsepower, and a 177 horsepower diesel with D-Cat technology, the newspaper said.
A three litre six cylinder, 250 horsepower engine, and a hybrid version, will follow at a later date.
