Mercedes-Benz learned the lesson first, and now, so has BMW. You can't put your vaunted badge on a crossover SUV with black bumpers, cut corners to keep the base price affordable, and expect to maintain premium brand credibility. The Mercedes M-Class has been true to its brand for a couple of generations. Now it's the BMW X3's turn.

BMW had a lot more to overcome. To try to make the '04 X3 handle like a tall sport sedan, the brand's engineers sacrificed ride. Like one of its competitors trying to capture the 3 Series' magical blend of ride and handling, BMW failed, and the X3 was far too harsh. A rushed, early-midcycle refresh improved the ride and added richer-looking body-colored bumpers, but the compact crossover still had a long way to go.

Specifically, it had seven years, the typical BMW model cycle. Though you won't mistake its sheetmetal as belonging on anything but an X3, the premium compact crossover is new from the ground up, sharing many components and basic architecture with the 3 Series. It's 3.3-inches longer, 0.4-inch wider (with slightly wider front and rear tracks, for better ride and handling) and half an inch lower, on a wheelbase lengthened 0.6 inch.

The Mark II X3 gets a new, five-link rear suspension and a two-link front suspension, with Dynamic Damping Control, which BMW says is a first in this segment. The new eight-speed automatic is standard in all North American models, and the xDrive 35i, with the twin-turbo six, adds the "sport" automatic, featuring steering wheel shift controls and a sport setting that changes the gearshift points.

The electronically controlled permanent four-wheel-drive system includes dynamic stability control (DSC), which automatically shifts torque to outside rear wheels under fast cornering, and shifts the torque bias to both rear wheels even under steady cornering. And the X3 is BMW's first X model to get electrically power-assisted steering.

The 8.8-inch navigation display includes an Internet connection with voice-read e-mails and a top view/rear-view camera. A head-up instrument display is available.

BMW claims the X3 as the original premium compact crossover, though it probably owes a lot to the midsize 1999 Lexus RX300, which was arguably the first attempt at finding the right-sized crossover to offer up to five people every sybaritic feature known to man at the time. It's an amorphous segment, giving comfortably well-heeled consumers everything they want and nothing they don't need. It's neither car nor truck. It's hard to inject passion into something like that.

With this second generation, Bavarian Motor Works has moved production of the X3 from Magna-Steyr's Graz, Austria, assembly plant to the sprawling Greer, South Carolina, plant (in Spartanburg County), which also assembles the X5 and X6 for the world. Appropriately, with BMW's $750-million factory expansion, the U.S. plant becomes supplier of sport/utility vehicles - sorry, "sport/activity" vehicles -- for all markets. All BMW SUVs, except the new X1, which has a lower height - it's as much tall station wagon as short SUV - and is smaller with a less well-appointed interior than the X3, are built there.

This means Spartanburg will build X3s with 2.0-liter turbodiesels and 2.0-liter gas fours, and six-speed manual gearboxes. Every one of these will be shipped from North America, though. There are two engine choices at launch: the naturally aspirated 3.0-liter inline six in the xDrive 28i and the turbocharged version of the same in the xDrive 35i. Yes, BMW brass teased they're considering a diesel X3 for the U.S. market, though it's more likely to be the same 3.0 I-6 used in the 335d and X5 diesels.

The 3.0-liter engines come with BMW's latest "efficient dynamics" technology, including direct gas injection and Valvetronic. North America will not get its stop/start technology, in which the engine shuts off at stoplights and stop signs, only to start right up when you lift your foot from the brake pedal. Our limited drive, in the wilds of exurbia Atlanta, was in a Euro spec car with stop/start, because BMW wants our reaction and because Spartanburg is building European-spec models first. Just be careful to shut off the engine if we're stopped for speeding, we were warned. If the engine starts up while revenue-raising law enforcement is studying our licenses, the officer could get nervous, thinking we're about to flee the scene.

MSA, or motor stop-start, yields a 2-percent fuel efficiency benefit on the European Commission CO2 cycle, though there's zero change or advantage on the U.S. Environmental Protection Agency fuel economy schedule. While X3 buyers may see a gain in real-world fuel economy, it comes at the cost of noise/vibration/harshness. The engine restarts at every stop, engaging the system with the distinctive sound and feel of the starter turning.

This might not be much of a problem had BMW not done such a good job on the new X3's body structure and overall NVH, making start-up noise and feel that much more noticeable. Compared with anything else, especially the old X3, this is one tight, quiet, luxury compact crossover. Front seat or back, there's very little road/tire, engine or wind noise, making it probably the quietest model in its class.

While the rear seat doesn't recline or slide back and forth, it's a pretty comfortable place, with good legroom and very good headroom for near 6-footers. The rear door aperture is somewhat tight for entry and exit, probably a result of the stout body. Interior quality-the fit and finish and the richness of materials-now is up to the level of 3 Series cars, though only in matching the status quo in this segment. It comes with contrast stitching on the seats and dash, but the leather seat inserts aren't nearly as supple as what you'll find in an X5 or 5 Series.

BMW offered up a moderately easy off-road drive of the twin-turbocharged xDrive 35i at a farm outside Atlanta. The X3 was as quiet as could be on the mostly gravel, red clay road, and nicely demonstrated its long suspension travel over a few severe bumps. It proved you'll be comfortable driving the X3 to your remote second home in the woods, and you probably won't need the hill descent control at all, unless you need to roll down steep hills at 5 mph.

There were no turns on the mildly twisty two-lane nearby that were tight enough to trigger the DSC. The drive only proved that the new X3 is nicely controlled, and that whatever tradeoff was made in handling is worth the silky ride. The electronically assisted power steering isn't up to BMW's best steering. It increases weight at higher speeds, making it easy to keep the tall vehicle centered on the highway, though the weight feels artificial, and the steering doesn't give you much road surface information.

Switch to the Sport mode and the eight-speed's super-smooth shifts become sharp, even a bit jarring. The twin-turbo's raspy note is wonderful under hard acceleration, and if nothing else, the engine's ability to motivate the two-ton crossover will remind you of which brand you've chosen.

After BMW's misstep with the first X3, it's back on track with an X3 that combines compact crossover convenience and versatility with much of the goodness of the car that remains the brand's best model, the 3 Series.

X3 by the numbers...
BMW's $750-million expansion of its Spartanburg County factory increases production capacity from 160,000 to 240,000. While the factory in the past has built the Z3 and Z4 sports cars, and North American-market 3 Series sedans, most recently it has built just the X5 and X6 crossovers, with 70 percent of production going to export markets. In fact, BMW claims to be the biggest automotive exporter from the United States, based on the dollar value of those X models.

With the latest expansion, the Spartanburg plant's capacity is larger than BMW's factory in its hometown of Munich.

The company expects to export 70 percent of its X3 production, too. There's still more room for expansion, and BMW has hinted it will bring more new models to U.S. production. No engines, though. An American engine plant would have to have capacity for 750,000 engines per year to be economically feasible, says BMW Chairman Norbert Reithofer. So BMW will have to continue to ship engines from Germany and England for installation into Spartanburg-built X models, with some 168,000 then shipped elsewhere, many of them back to Western Europe.

With X3 production moved to the U.S., BMW will use the model to launch its Customer Oriented Retail Experience (CORE), an attempt to get Americans to buy custom-order cars, rather than buy them right off the showroom floor. American customers will get their new X3s in as little as three weeks, and can change the color/option order up to six days before it's built. Then, they can watch their X3s roll down the assembly line online and take delivery at the BMW Zentrum in Greer, South Carolina, if they wish.

BMW says the X3 xDrive 28i, at $37,625, is $2,100 cheaper than a '10 X3, plus it adds standard Bluetooth connectivity, an iPod connector, and an anti-theft alarm. The 35i replaces the 28i's 17-inch wheels with 18-inch wheels, and adds xenon headlamps and the adaptive damping control.


2011 BMW X3
Base price $37,625 - $41,925
Vehicle layout Front-engine, 4WD, 5-pass, 4-door, SUV
Engines 3.0L/230-hp/200-lb-ft DOHC 24-valve I-6; 3.0L/300-hp/300-lb-ft DOHC 24-valve twin-turbocharged I-6
Transmission 8-speed automatic
Curb weight 4050 lb (mfr)
Wheelbase 110.6 in
Length x width x height 183.0 x 74.1 x 65.4 in
0-60 mph 5.5-6.7 sec (mfr est)
EPA city/hwy fuel econ not yet rated
CO2 emissions not yet rated
On sale in U.S. January 2011
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