Driving:
The X3 feels sporty and alert on the road, and the key to this is its xDrive four-wheel drive system. This uses a centrally-mounted, electronically controlled clutch to transfer power to the wheel that needs it most. Using the DSC stability control sensors, xDrive ensures optimum traction, both off-road and on. It works unobtrusively, but you can feel the benefits round the bends, as the BMW corners cleanly. What's more, thanks to good steering feel and excellent body control, the X3 is genuinely fun behind the wheel. The SUV's more powerful engines help exploit this, particularly the superb 3.0sd, which borrows the 535d's twin-turbo diesel engine. With 580Nm of torque and a slick six-speed automatic gearbox, performance and refinement are outstanding. In contrast, the base 2.0d sometimes struggles with the X3's weight, though it too is a smooth performer. It's also worth noting that the X3 rides firmly - the flip-side of such involving handling.

Marketplace:
The X3, revised in 2006, fits more comfortably within the line-up alongside the second-generation X5. Previously, they were too closely-matched, but now the X3 sits more cohesively alongside rivals - helped by the growth of Land Rover's Freelander 2, of course! It was facelifted in 2006, with a larger radiator grille, repositioned foglights and new bumpers marking out the revised model, along with trendy LED-style rear light clusters. Greater use of body-colour plastics helps give it a smoother look, though it's still upright and slightly ungainly from certain angles. As well as the Freelander, rivals include Honda's CR-V, Toyota's RAV4 and the Lexus RX.

Owning:
Short overhangs not only give a sporty look, but they also aid rear legroom. There's a real feeling of spaciousness in the X3 for passengers. The 480-litre boot is also accommodating, too; it's bigger than the original X5! Up front, there's lots of seat and steering wheel adjustment, so the driving position is spot-on and gives excellent visibility. But the cabin itself lacks the sense of occasion you would expect of a £30k-plus car. While the dimple-effect, soft-touch dash plastics are good quality, harder materials are used for the central transmission tunnel and flip-out cup-holders. Overall, it lacks the luxury feel of some rivals, despite some trims receiving a quality boost in 2006. But that doesn't mean it isn't well put-together, and the X3 displays all of BMW's impeccably high assembly standards. You certainly pay for this though, with steep list prices certainly granting the X3 premium SUV status. Options are also costly, but retained values are good and the diesels are commendably efficient.