Based on the previous-generation 3 Series sedan, the BMW X3 is a downsized version of the X5 that promises similar levels of sportiness and utility. It has a high seating position, all-weather traction and just enough sharp edges to give it a look all its own. Add in plenty of bulletproof hardware from the 3 Series lineup, and indeed the X3 has all the makings of a very popular compact luxury SUV.
The BMW X3 features a full-time all-wheel-drive system dubbed xDrive. With the ability to detect slippage and redirect power to the wheels with the most traction, this system gives the compact BMW SUV outstanding handling in both wet and dry situations. In addition to all-weather capability, the X3 features a commanding view from the driver seat along with ample passenger and cargo room. Numerous storage spaces are sprinkled throughout the interior for added versatility, and the X3 can accommodate multiple mountain bikes, according to BMW. Like its 3 Series cousins, the X3 sports a stylish interior highlighted by large analog gauges and high-quality switchgear.
Unfortunately, not all of the materials used in the cabin meet premium standards set by the 3 Series, so those expecting an upscale environment may be disappointed. The BMW X3 is one of the few compact sport-utilities with a luxury-brand nameplate. Although we hesitate to recommend that anyone spend close to $40,000 on a small SUV, the X3's package of style, performance and day-to-day functionality could be compelling for shoppers who want a 3 Series sedan but need more cabin space and utility. It's certainly not a traditional SUV by any means, but if you like the way the 2006 BMW X3 looks on paper, you're most certainly going to like the feeling behind the wheel.