Lexus takes on Mercedes in the SUV market.

Nine years ago, Toyota Motor Corp. launched its Lexus division to challenge the likes of Mercedes Benz and BMW - and it has largely succeeded.

Now Lexus is facing another, similar challenge: marketing its new RX 300 sport utility vehicle as an alternative to the popular Mercedes-Benz M-Class SUV.

Both vehicles are in the same price range - about $31,550 for a basic Lexus RX 300 and about $35,000 for the basic Mercedes-Benz ML320. Both are targeted at affluent driven in their early-to-mid 40s who are looking for a change from a sedan or mid-sized car.

Also, both have prestigious names affixed to their bodies.

Lexus' marketers and advertising representatives say they are planning to lure customers away from the Mercedes not by comparing the M-Class with the RX 300 - which arrives at dealerships on March 20 - but rather by playing up their differences.

"I think distinctively we're creating our own market, and they're creating their own market," said Steven Sturm, corporate marketing manager for the Torrance-based Lexus division of Toyota.

Chief among the RX 300's differences, Sturm said, is that it is based on a car body, rather than a truck body, and thus fides more like a car. The M-Class, like most SUVs, is based on a truck body.

But Mercedes also claims that its SUV rides like a car, because it features independent front and rear suspension while most SUVs only have independent front suspension.

Sturm acknowledged that many customers looking at the RX 300 also will be considering the M-Class. "There's kind of a gray area where people are going to consider them both," he said.

Lexus likely will face an uphill battle to establish the RX 300 in a market where the M-Class has made significant inroads during its first year.

In the U.S., Mercedes has sold close to 20,000 of its ML320s, the first M-Class vehicle, and expects to sell a total of 40,000 by the end of the model year this fall. The company had expected to sell only 33,000 during the ML320's first model year, and had to increase its production to meet demand, said Jim Koscs, spokesman for Mercedes-Benz of North America Inc., the U.S. arm of Daimler-Benz AG.

Lexus, on the other hand, plans to sell 20,000 to 24,000 RX 300s in its first year, said Lexus spokeswoman Holly Taylor Ferris.

Overall, Mercedes remains a more popular brand name than Lexus in the United States. Mercedes sold more than 122,000 vehicles in the United States in 1997, while Lexus sold about 98,000 vehicles.

Bob Schnorbus, director of automotive analysis at Agoura Hills-based J.D. Power and Associates, said he thinks Lexus' RX 300 has a good chance of being a strong competitor.

"Lexus has had a record for very high quality, very successful products in the past," Schnorbus said. "The M-Class, I think, has a strong advantage in the market in that it is a Mercedes product. But I think Lexus has a similar reputation for quality."

Schnorbus said that, even though the M-Class has been popular in its first year, it is still a relatively new product and has not yet dominated the market. "There is likely to be a relatively healthy market for both products, and it will be interesting to see which one will dominate," he said.

Staff members of El Segundo-based Team One Advertising, which handles Lexus' ad campaigns, said their plan for the RX 300 is to play up its differences from the M-Class, but without actually mentioning its competitor.

"The vehicle has all the attributes of the traditional SUVs but without the tough ride," said Tom Cordner, co-chairman and executive creative director of Team One. "We needed to communicate to people that this is unlike any other SUV on the market, and completely unlike the M-Class."

In fact, Team One's tagline at the end of its RX 300 television commercials, which began running on CBS during its coverage of the 1998 Winter Olympics, is, "Not just another SUV - it's like no other vehicle on earth."

Team One plans to advertise the RX 300 in many of the same print media in which Mercedes advertises its sport utility, such as sporting and outdoor-themed magazines. But the agency also will place ads in more mainstream newsmagazines and newspapers, as well as in upscale family magazines like This Old House.

The agency also plans to advertise during NBC's "Must See TV" Thursday nights and on CNN and the Discovery Channel - all channels on which Lexus can reach a mainstream, but slightly more affluent audience.

Andrie Cantu, media supervisor with Team One, said that about half the potential customer base for the RX 300 consists of drivers with spouses and children.

"We're definitely trying to stay with our affluent target," Cantu said. "But we're also trying to target families."

Mercedes, for its part, does not expect to alter its marketing strategy for the M-Class based on the introduction of Lexus' new SUV.

"As far as the Lexus RX 300, we would not be responding to a competitor," Koscs said. "We let (our) vehicle stand on its own merits."

As for the future of the SUV industry, Schnorbus said there likely will be more sport utilities targeted at upscale drivers.