BMW X3

But then along came the X5 and changed people's perceptions. The chunky 4x4 made its debut in 2001 and quickly became one of the firm's most popular models. Now, BMW is hoping to do the same thing all over again, by shaking up the market for smaller SUVs. This is the new X3, and it goes on sale here this month, with prices starting from ΂£28,715.

We drove the 2.5-litre SE model, which will account for the bulk of sales until the diesel versions arrive next year. The looks will cause controversy, but dark colours suit the X3 best - in lighter shades, the black plastic bumpers appear cheap and crudely finished.

Inside, the cabin is intelligently laid out and offers nearly as much space in the front, rear and load bay as the larger X5. It's smartly finished and the controls feel well made and chunky, but some of the interior plastics aren't up to the quality you would expect of a premium marque such as BMW. For the moment, only petrol engines will be offered in the UK, and this will be a major drawback for many buyers.

Demand for the diesels in left-hand-drive markets must be satisfied before they are offered in RHD, in around 18 months. But the 2.5-litre six-cylinder is a versatile unit, with a reasonable spread of torque and excellent high-speed refinement, although its CO2 emission figures put this model into the top tax bracket for company car drivers. Yet it's the chassis which really shines. It demonstrates excellent traction, thanks to BMW's superb xDrive 4WD system.

The set-up distributes the power depending on the way the car is driven and the road surface, and gives remarkable grip for a 4x4. We only got the DSC stability control warning light to come on under extreme circumstances, while through fast corners the X3 is as assured as a 3-Series saloon.

In SE trim, with 17-inch wheels and taller suspension, the newcomer gives a superb ride and suffers very little body roll. Even the steering feels well weighted and precise, and we think the X3 is better than an X5 in terms of dynamic ability, plus more agile and nimble. But only the truly vain will opt for the Sport pack, with bigger wheels and lower suspension, as the ride suffers badly and the handling improvement is negligible.

The xDrive set-up also works just as well on loose surfaces as it does on tarmac, meaning the X3 can rightfully claim to be an off-roader. A BMW with great mud-plugging ability? Now that really is something new...