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The BMW 1-Series and Audi A3 better look out as Infiniti is reportedly working on a new entry-level model as a direct competitor to the aforementioned premium compacts. Lexus, too, is working on such a car, which we’ll get to see in production trim at next week’s 2010 Geneva Motor Show, however, there will be one distinguishing factor that could see the baby Infiniti form its own niche–an all-electric powertrain.

We first heard about an Infiniti compact late last year but now we have confirmation that the company is at least investigating the idea.

“We are aware of the downsizing trend and the smaller car category is a subject for us to study,” Infiniti boss Toru Saito revealed to What Car? during a recent interview.

If given the green light, the new Infiniti compact will most likely share its underpinnings with the Nissan LEAF and be available with conventional gasoline and diesel engines as well as an all-electric option. Infiniti’s first diesel models have just gone on sale in Europe.

Such a car from Infiniti would be ideal in strengthening the brand’s presence in Europe, where compact cars like the BMW 1-Series and Audi A3 sell in substantial numbers. The move reflects the growing demand for cars that are smaller and more fuel and CO2 efficient, a trend Infiniti hopes to capitalize on.

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Infiniti’s new M Line luxury performance saloon, bristling with safety technology, driver aids and marketing hyperbole, will be unveiled at the Geneva Motor Show.

Key features on the five-seat, rear-wheel-drive car include V6 diesel and petrol engines, seven-speed automatic transmission, a Blind Spot Intervention system that actively prevents the driver from steering into the path of other vehicles, and what Infiniti claims is its “best ever cabin”.

On sale in Europe from September, first pictures of the European-spec car reveal the model’s unmistakeable Japanese parentage, albeit leavened with what the makers call a “ducktail” boot lid, powerful-looking wheelarches, a neatly tapered bonnet and what Infiniti not unrealistically calls “athletic” elegance.

Clearly aiming for the pockets of the wealthier, fickle buyer, press material accentuates the range of luxury accessories.

Wood trim is not merely decorative, but “an art piece”, while materials in the cabin don’t just feel good, they offer a “very tactile experience”.

The M Line doesn’t just have climate control, it has “Forest Air”. It doesn’t just push air around the cabin, it “delivers a gentle breeze”. As if this weren’t enough, a range of scents – such as “leaf” or “wood scent from the tropical borneol tree” are wafted under passengers’ noses.

Whether owners will agree that this has “a calming effect but in addition aids concentration, important with a car as powerful as the new Infiniti M”, remains to be seen.

A new feature for Infiniti (a concept previously pioneered by Lotus) includes Active Noise Control which is aimed at ridding the cabin of unwanted low-frequency engine noises by playing opposite-phase sounds over the speakers to create a noise-cancelling effect.

There are also four driver-selectable modes which trim the car to give its best in Eco, Sport, Snow and Standard conditions. In Eco mode, the accelerator “exerts a gentle resistance when the pedal is being pushed needlessly hard”.