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Date: 18 September 2006

Category: 4x4
Price: £28,560-£38,175
Key rival: Range Rover Sport

It might be a surprise, but BMW claims it sells more four-wheel drive vehicles than any other premium brand.

Despite Audi's inherent tie-in with the Quattro branding, its German rival has stolen a march with an early entry into the 4x4 market with both the X5 and the smaller X3, as well as four-wheel drive versions of the 3- and 5-series not yet sold in the UK.

While Audi sets about launching a new full-size off-roader in the Q7 and continues to develop its smaller 4x4, BMW's equivalent to the smaller vehicle has reached its mid-life facelift. And to make life interesting, the more mentalist element in Munich has decided to slot in the 3.0-litre twin-turbo diesel engine first seen in the 535d. Not only does this make the X3 the first BMW range to have a diesel as a flagship, but that flagship off-roader is capable of 0-62mph in 6.6 seconds and has a top speed of 149mph.

Facelifted BMW X3

In isolation, it's not easy to spot the difference between pre- and post-facelift X3. Side-by-side, it's obvious that the traditional BMW kidney grille is larger, while bumpers have been redesigned front and rear, along with the rear light clusters.

It's still not what you'd call pretty, though, and the rather ungainly design remains, especially at the rear where the boot meets the rear panels.

But the new engine is something of a revelation. Predictably, it's seriously quick, thanks to the 286PS on tap, and there was little hint of a let-up in acceleration when we ran out of autobahn at over 125mph on the test route. The typical BMW strengths of steering and handling remain, although the company hasn't made any move to address the X3's biggest weak point, its poor ride quality, especially on the UK's rutted roads.

The other worry is the price. An entry-level Range Rover Sport, a bigger and more luxurious 4x4 with arguably a more desirable brand, is more than £1000 less, while its Land Rover Discovery sibling comes in from less than £27,000.

Compared with the standard 3.0 diesel without the twin-turbos, the new engine costs around £2500 more, and adds another 3ppm and two insurance groups, although both hit the maximum 35% BIK banding. On the flipside, economy is near identical, the top speed is up 19mph and more than a second drops off the 0-62mph time.

BMW accepts that only 5% of X3 buyers will opt for this top-spec engine, and they'll be getting a cracker, even if the finance director may not necessarily agree.