BMW X3 2004 Review

And with sales of sports utility vehicles also out of control, BMW cannot get enough X5s in any configuration to satisfy demand.

So it is that the compact X3 four-wheel-drive has been introduced here.

It's not much smaller than an X5, but substantially cheaper. And it just may satisfy those who want a luxury SUV for its wagon shape and convenience, rather than its off-road ability.

Those buyers will certainly not be disappointed with the X3 urban wagon.

It's great on our city streets where it points and darts with a nimbleness belying its size.

Jump in behind the wheel and there is a very 3 Series feel about the cockpit. Almost sporty.

However, set the wheels in motion and it drives and handles nothing like a 3 Series.

And neither should it. The X3 has permanent four-wheel-drive (called xDrive) that varies power distribution to the front and rear as needed, so it doesn't understeer and oversteer like the rear-wheel-drive 3 Series.

Despite having the same body dimensions as many compact SUVs on the market, such as the Toyota RAV-4, Nissan X-Trail and Honda CR-V, it has a longer wheelbase which gives it far better ride.

It also doesn't bounce over speed bumps. The BMW takes them on at speed without hesitation and sorts itself out quick-smart afterwards, rather than bouncing down the road.

And there is little body language in the corners, the X3 sitting flat and in control.

But the sophisticated suspension and chassis calls on the little 2.5-litre engine to do much more than it can.

Plant your foot and it screams like a banshee without much response from the speedo.

For an extra $9300, the three-litre engine is a better option for those demanding performance.

Although it takes a second look to tell an X3 from an X5, the little guy seems a bit sharper than its tired big brother, sitting lower and sportier than most other compact SUVs. Only that grille and back door retain a spartan ugliness.

Inside, there is a functional and uncluttered dashboard, efficient instrumentation and all the cruise and audio controls on the steering wheel where they should be.

It feels cosier than the X5, yet there is good room in the back and plenty of luggage space.

The auto box is adequate, but the sequential shifter is on the slow side.

Brakes are strong with all the usual BMW auto assistance, yet giving good progressive feel to the driver.

Fuel consumption is erratic with a huge disparity between city and highway driving, thanks to the underpowered engine which has to work so much harder to get going in traffic.

The stated figures of 17L/100km around town and 9L on the highway seem about right. The manual apparently does much better.

As for its off-road ability, it is handy on unsealed roads where it rallies well, but don't expect it to climb rocks, wade through water over 500mm or crest dunes.

If you want to dress it up for an urban assault, expect to pay big dollars: options include park distance controls ($1680), sport suspension ($400), metallic paint ($1700), panorama sun roof ($3300), adaptive headlights ($2970) and navigation system ($6990).