On this level I would guess we would all have to agree that Lexus is up there with BMW and Mercedes (if not possibly not AS nice)...and I think I would rather have Lexus more than most other cars at this point. Lexus IS 250 AWD is one of my favs... Out of those two I would have to go with BMW because they make faster cars in my opinion...they are very well built too...the doors are always heavy duty, the engines are always tuned to perfection. I have never owned a mercedes and to be quite honest with you dont even know if I have ever been in a mercedes before. They just arent all that common here. Sounds like people think that Mercedes makes a more luxurious car...so my guess would be it just depends on what you are looking for.
Definitely a Mercedes, if you ever drove both cars you'll know that Mercedes cars are on a different level and can't be compared to BMW, but one of the advantage BMW has on Mercedes is that its design is for youngsters compared to Mercedes which has a design of a more formal professional type of person and not a lot of people like that.
Many people I know who've owned both will tell you "Mercedes-Benz makes the best cars in the world." That doesn't mean everyone should buy one, because cars are more of an emotional thing than logical.... so perceived cost, looks, and image also come into play. As far as safety and not cutting corners, nobody can touch Benz but in the past they've gained a reputation of being "older people cars" that don't handle as well as a BMW. That's been changing in the last few years, and now many people buy the C63 AMG over an M3, an E-Class over 5-series, ML over X5, GLK over X3, and definitely C-Class over 3-series (left BMW Canada sitting on ~20,000 3-series the year the new C-Class came out. Lexus-Toyota is a great brand.... nothing bad to say about it, but it's nowhere near the level of a Benz - only on paper. I actually know a guy who managed a Lexus dealership for 15 years, then moved to manage a Mercedes dealership and a year later told me there's really no comparison of who builds cars for the ultimate driving experience between the two. Like I said, Toyota makes great cars but they're designed by accountants, where Mercedes are designed by drivers and top engineers. BMW is a fun car, but in Canada they're more associated with young money, or people aspiring to someday have money (like young businessmen, and real estate agents). Mercedes are for established people who have a taste for the finer things in life. MB has also contributed more to the automobile than any other manufacturer. From patenting the first "car" to most of the safety features we take for granted in lower end cars today. I also heard they spend about $20m/day globally on environmental research... they take what they do much more seriously than most and it shows when you drive one. BTW - I vote Benz in case it wasn't clear above