The all-new second generation 2022 Lexus NX, now riding on the TNGA-K platform that also underpins the latest generation Toyota Harrier (plus Camry and RAV4 too), has just made its global debut over the weekend. Sales will begin in USA and Europe in the third quarter of 2021, as a 2022 model.

The 2022 Lexus NX will drop the outgoing NX 300 (previously known as NX 200t) model’s 2.0-litre twin scroll turbo 238 PS / 350 Nm engine, which is a shame because the 8AR-FTS engine is the best turbocharged 4-cylinder we’ve tried – so smooth, it has the throttle response of a naturally aspirated engine, but pulls like a train.

The short-lived 8AR-FTS is uncharacteristically Lexus. The company didn’t explain why the engine was dropped after just one generation, but we are certain that the upcoming Euro 7 exhaust emission standards has something to do with it.

In its place, Lexus has introduced 4 different four-cylinder engines, 2 of them new to Lexus:

• 2.5-litre naturally aspirated, A25A-FKS (NX 250): 199 PS
• 2.5-litre full-hybrid, A25A-FKS plus THS II (NX 350h): 242 PS
• 2.4-litre turbocharged, T24A-FTS (NX 350): 279 PS (new)
• 2.5-litre plug-in hybrid, A25A-FKS with THS II Plug-in (NX 450h+): 306 PS (new)

The A25A-FKS is the 2.5-litre Dynamic Force engine that has already seen service in the Lexus ES 250 (and Toyota RAV4).

In Malaysia, the outgoing Lexus NX with a 2.0-litre turbo sells for between RM 306,117 (NX 300 Urban) and RM 339,018 (NX 300 F Sport). Despite being imported from Japan (CBU), the NX is still quite competitive against locally-assembled (CKD) rivals like the Mercedes-Benz GLC, BMW X3, and Volvo XC40.

Prices are valid until 31-December 2021, inclusive of sales tax exemption/discount.

With the new bigger capacity 2.4-litre / 2.5-litre engines, prices for the all-new 2022 Lexus NX will certainly go up, as Malaysia’s import and excise tax structure is based on engine capacity.

If Lexus Malaysia opts for the naturally aspirated 2.5-litre, it will be seen as downgrade from the outgoing NX 300 model (39 PS less).

If it chooses the 2.4-litre turbo, it will be priced even further out of the competition.

The hybrid and plug-in hybrid are both dead in the water, as taxes would’ve inflated the higher prices of the hybrid models far too much.

Remember that in Malaysia, import duty, excise duty, and sales tax are added one upon another, it’s tax upon tax, so a small RM 5,000 difference can quickly inflate to RM 15,000.

The bigger engine capacity Lexus NX 350 will also run into problems with the existing Lexus RX, which is still using the smaller capacity 2.0-litre 8AR-FTS engine. The Lexus RX 300 now starts from RM 385,306 to RM 424,187.

Whichever engine Lexus Malaysia decides one, the price gap between the all-new NX and outgoing RX will be reduced quite significantly.

But here’s the clincher, few other countries are facing this problem. Only Malaysia, which in the grand scheme of things, is a rather insignificant market, will find the new larger capacity engines to be a problem.

Thailand should do fine because its excise tax structure is now based on CO2 emission – which these new engines are very good at.

So even though the imported NX will still be priced at a disadvantage against locally-assembled Mercedes-Benz and BMW models there, the status quo will more or less remain the same for Lexus Thailand.

Elsewhere, cars are taxed based on their CO2 emission. Western Europe for example, will only sell the NX 350h and NX 450h+. Only lesser developed Russia and Eastern Europe will offer the NX 250 and NX 350.

USA however, will offer all four engines.

Lexus’ biggest market is USA, contributing over 40 percent of its total sales, followed by China and Europe. The latter two places huge importance on plug-in hybrids, while USA still prefers larger capacity engines.

So Lexus has to plan its powertrain strategy to be in-line with what governments of its major markets are doing, and if that means sacrificing poor Malaysia, that’s just too bad.

Also, larger capacity engines do better in real-world fuel economy and exhaust emissions tests, and the latest WLTP fuel consumption and exhaust emissions test standard is drafted with that understanding.

Also read: NA vs Turbo: Why they say there’s no replacement for displacement

This is also why Volkswagen has dropped the 1.4 TSI from Europe, replacing it with a bigger 1.5 TSI evo.

Thanks to Toyota’s combination of hybrids plus larger capacity engines – both of which deliver better real-world environmental performance than small capacity turbocharged engines, it is one of the few companies that have never been investigated by European authorities for falsifying CO2 emission data.

All other European brands that have relied on downsized engines - Fiat, Renault, PSA Group, BMW, Mercedes-Benz, Porsche, Audi, Volkswagen – have all been targeted for falsifying exhaust emission claims.  

The change in Lexus' powertrain strategy also means that there is no better time to buy the outgoing Lexus NX. Remember that prices will go up after 31-December 2021, when the 50 percent sales tax cut for imported vehicles expires.