Toyota RAV4

There's no doubt buyers are willing to pay a little more for today's bigger, better-equipped compact SUVs. Yet while the RAV4 T180 is superbly built, has stacks of kit and drives brilliantly, it's simply too costly. Badge-conscious buyers and existing customers are unlikely to be convinced - particularly when lesser RAV4s offer so much better value.

Not content with shaking up the luxury car sector with the Lexus brand, Toyota is now bringing its mainstream models to bear on its executive competitors, too.

The first to be sent into the battle is the RAV4 T180 - Toyota's new 'premium challenger'. Despite the maker's mass-market image, it's determined to position the range-topper as an X3 rival. And with a tag of £26,995 - £8,000 more than the entry-level RAV4 - it's certainly got a very BMW-like price.

Packed with hi-tech kit, and with a 175bhp turbodiesel, is the T180 a gen-uine prestige SUV alternative, or a leap too far? Before we get to the driving experience, a word about the styling.

When spending £25,000-plus on an off-roader, you want it to look different to the base model. But apart from 18-inch alloys, a restyled grille and tinted rear glass, the T180 is much like the other models in the range. However, the car is generously equipped. You get sat-nav, Bluetooth wireless connectivity, a six-speaker CD stereo with MP3 compatibility and dual-zone climate control, as well as cruise control and electric leather seats. Factor in the dash's neat design and solid construction, and you have a cabin that approaches BMW standards.

On the move, this car continues to impress. While low-speed acceleration isn't much better than the 134bhp 2.0-litre turbodiesel's, the 400Nm of torque provides massive punch in third gear and above, and the Toyota pulls hard at motorway speeds. The T180 feels nearly as quick as a hot hatch.

The extra performance doesn't affect efficiency much, either; economy drops slightly from the 42.8mpg of the 134bhp car to a still excellent 40.4mpg on the combined cycle. Emissions are fine, too - 185g/km of CO2 against 173g/km.

On a twisty road, the T180 is just as good to drive as lesser RAV4 models, with superb body control, agile handling and plenty of grip thanks to the Active Drive and Active Torque Control. These use a host of stability systems and variable 4WD to maximise grip. The only pay-off for the agility is a firm ride.

But the trouble is, none of this will matter to anyone wanting a BMW X3. Regardless of the T180's driving dynamics, diesel engine and epic standard kit, for certain buyers it simply has the wrong badge on the front. And with such a high price, it's difficult to imagine many current RAV4 fans writing out a cheque, either.

If you're in the market for Toyota's new SUV, the mid-range 134bhp XT4 D-4D makes most sense. It's a car that may have grown up, but still knows its place.