Produced as a direct competitor to the luxury sports sedans of the leading European luxury marques, the XE10 series Toyota Altezza and Lexus IS was designed with a greater performance emphasis than typically seen on prior Japanese luxury vehicles. The engineering work was led by Nobuaki Katayama from 1994 to 1998 under the 038T program code, who was responsible for the AE86 project. Design work by Tomoyasu Nishi was frozen in 1996 and filed under patent number 1030135 on 5 December 1996, at the Japan Patent Office. At its introduction to Japan, it was exclusive to Japanese dealerships called Toyota Netz Store, until Lexus was introduced to Japan in 2006. The Japan-sold AS200 Altezza sedan and AS300 Altezza Gita correspond to the Lexus IS 200 and IS 300 models respectively, as sold in markets outside of Japan. The Lexus IS' primary markets were North America, Australia, and Europe. The Altezza Gita was a hatchback-station wagon version sold in Japan and was known in the US and Europe as the Lexus IS SportCross. The AS300 Altezza Gita was the only Altezza with the 2JZ-GE engine; in export markets this engine was available in the sedan models as well as the Lexus IS 300 Sedan.
1998-2000
Introduced in 1998 with the AS200 (Chassis code GXE10) and RS200 (chassis code SXE10) sedans, the compact vehicle was produced using a shortened, front-engine, rear-wheel-drive midsize platform, allowing Japanese buyers to take advantage of tax savings imposed by Japanese government regulations concerning vehicle engine displacement (but not exterior dimensions, as the car was 20 mm wider than the 1,700 mm standard), and adapted parts from the larger second-generation Aristo/GS. The 2.0-litre 1G-FE straight-six powered AS200 (GXE10, sedan) was equipped with a six-speed manual transmission as standard, while a four-speed automatic was optional. The 2.0-litre 3S-GE straight-four-powered RS200 (SXE10, sedan) was equipped a six-speed manual transmission, while a five-speed automatic was optional. The different size engine choices gave Japanese buyers a choice of which annual road tax obligation they wanted to pay, and the larger engine offered more standard equipment as compensation.
The design received critical acclaim at its 1998 launch and was awarded Japan's "Car of the Year" honor for 1998-1999. A few months later, Lexus began marketing the IS 200 equivalent models in Europe. The IS 200 in Europe was rated at 153 hp (114 kW), with a top speed of 216 km/h (134 mph), and 0 to 100 km/h (0-62 mph) acceleration time of 9.3 seconds. The styling cues of the rear lamp clusters on the first-generation models were copied by a number of after-market accessory manufacturers for applications on other vehicles. This iconic style of one or more internal lamp units, covered with a clear (or tinted) perspex cover made popular by Lexus, became known in many circles as 'Lexus-style' or 'Altezza lights'. The taillight style became so popular, that it influenced the development of clear-covered LED taillamps that only revealed their colour when illuminated. The XE10's chief engineer was Nobuaki Katayama, while the chief test driver and test engineer was Hiromu Naruse.
2000-2003
In July 2000, a hatchback/station wagon model, the AS300 (Chassis code JCE10), was introduced featuring a 3.0-litre 2JZ-GE straight-six engine. Equipped with rear- or all-wheel drive (JCE10, RWD Gita wagon; JCE15, 4WD Gita wagon), the AS300 was only available with an automatic gearbox; a five-speed automatic for the RWD Gita wagon and a four-speed automatic for the 4WD Gita wagon. The six-cylinder version (2JZ-GE) was only available in Japan on the Gita models. In the US, the IS 300 sedan debuted in July 2000 as 2001 model and the wagon debuted in 2001 as a 2002 model with the same 3.0-litre six-cylinder engine (the 2.0-litre six-cylinder was not available), while in Europe, the IS 300 joined the IS 200 in the model lineup. All Lexus IS 300 models in the US were initially only available with the five-speed automatic transmission; this was also the case in Europe. However, a five-speed manual was made available in the US in 2001 for the 2002 model year (not available on the SportCross wagon). Visually the exterior of the European IS 200 Sport and 300 were almost identical, the only differences being the boot insignia and the larger-engined model initially having clear front indicators (later generalized to IS 200 range).
The first-generation IS' interior featured unique elements not typically found in other Lexus models. These included a chrome metal ball shifter (USDM & European market, other markets received an optional leather-trimmed shifter), (optional) pop-up navigation screen, and chronograph-style instrument panel (with mini gauges for temperature, fuel economy, and volts). For the European and Australian markets, the IS 300 gained full leather seats rather than the leather/escaine of the 200, plus Auto-dimming rear view and side mirrors, and HID headlamps. In the US, the Environmental Protection Agency listed the IS 300 as a subcompact car; although it technically had enough overall volume to be called a compact, rear seat room exhibited subcompact dimensions.
The US National Highway Traffic Safety Administration (NHTSA) crash test results in 2001 gave the IS 300 the maximum five stars in the Side Driver and Side Rear Passenger categories, and four stars in the Frontal Driver and Frontal Passenger categories. The Insurance Institute for Highway Safety (IIHS) rated the IS "Good" overall for frontal collisions and "Good" in all six measured front impact categories.
For the first-generation IS in the North American market, sales hit a high of 22,486 units in 2001; subsequent sales years were less than forecast, and below the 10,000-unit mark in 2004. The IS 200 fared better relative to sales targets in Europe and Asia, while still well short of the sales volume achieved by the Mercedes-Benz C-Class and other, mostly German-made competitors. This trend was indicative of Lexus' smaller global status; while Lexus' range of cars was very successful in North America, the marque's sales lagged behind its German rivals in Europe. In Europe, the lack of a manual gearbox option for the IS 300 may have limited sales in contrast to its rivals, the BMW 3 Series and the Mercedes C-Class.
In 2000, TTE introduced a compressor kit for the IS 200 in the European market. An Eaton supercharger at 0.3-bar pressure increased the power output to 153 kW (205 hp) without sacrificing fuel consumption (+3.3%). The kit was initially available as an aftermarket fitment, but could also be obtained as OEM Lexus accessory on newer cars through the official Lexus dealer network and was fully covered by the standard warranty. This variant was discontinued when the IS 300 was introduced in the European market.
2003-2005
In 2003 for the 2004 model year, the IS line received a minor facelift (designed by Hiroyuki Tada). On the exterior, was a redesigned 11-spoke wheel design, redesigned fog lamps, and smoked surrounding trim for the headlamps and taillamps. On the interior, a 2-position memory function was added for the driver seat, a maintenance indicator lamp, automatic drive-away door locking system, a storage compartment on the dash (for models without the navigation system) and updated trim highlights.
An official concept model, the MillenWorks-built Lexus IS 430 was unveiled at the SEMA Show in Las Vegas, Nevada, in 2003. The IS 430 prototype was an IS 300 fitted with a 4.3-litre V8 from the GS 430. Lexus dubbed the IS 430 a one-off with no plans for production. In Europe, Toyota Team Europe (TTE) installed a supercharged 4.3-litre V8 into an IS 300 bodyshell, the result was a 405 PS (298 kW; 399 hp) ECE sedan.
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