Sales of SUVs may be slowing but that hasn’t stopped carmakers around the world developing new models to cater for the competitive market. Mercedes-Benz just took the wraps off its new GLK compact SUV and now Lexus is considering building a small SUV of its own. The official stance thus far has been to ignore launching a new model but the increasing number of vehicles in the compact-luxury segment has got Lexus executives to rethink their stance.

Officials have reason to be wary. The compact SUV market already has several strong competitors in the form of the BMW X3, Acura RDX and Infiniti EX35, and soon it will be joined by the new Mercedes GLK and upcoming Audi Q5. Speaking with Automotive News, Toyota America Chief Jim Lentz said a small Lexus SUV could be a response to the "urbanization" of Gen Y buyers and empty-nest boomers, which studies have found is an expanding market.

The new model would be positioned below the current RX350 (pictured), Lexus’ smallest SUV model, and would be priced around the $30,000 mark. To keep costs low engineers would use an AWD version of the Toyota RAV4 platform but developers are still worried about creating a luxury vehicle that would sell in this price range.