A visitor surveyed the BMW X3 in the parking lot.

"In Europe," he said in a thick foreign accent, "that's what we call a big vehicle."

To each his own.

The 2004 BMW X3 sport-activity vehicle, or SAV, German for sport-utility vehicle or SUV, is the new, smaller companion to the BMW X5.

Not much smaller, however--only 4 inches shorter and 0.7 inch narrower--but still economy size considering the X5 starts at about $41,000, the X3 at $31,000.

Another notable difference is that the X3 is offered with a choice of inline 6-cylinder engines, a 2.5- or 3-liter, and the X5 has the 3-liter 6 or a 4.4-liter V-8.

BMW added an X3 to win over younger buyers who are affluent, but somewhat less so than those who opt for the X5.

Besides, BMW realized that 50 percent of those who buy an SUV (or SAV) chose one in the $30,000 to $40,000 range, which left it out of 50 percent of the market.

In addition to marketing strategy, BMW said another reason for the X3 is that at $41,000 plus, X5 buyers are afraid to get their vehicle dirty.

So the X3 has been added to the lineup, complete with carpeted gray mats to camouflage the dirt you are expected to bring on board.

BMW thinks of everything.

The X3 is more the everyday machine that also doubles as the mountain-bike or camping-gear hauler on weekends.

It comes with full-time xDrive all-wheel-drive, which always directs torque to the rear wheels but directs it to all four wheels as needed.

So you can take it off road and get the vehicle as dirty as you'd like--within limits. BMW says the X3 doesn't have the high ground clearance needed to travel extra-tough terrain.

"If you're thinking about climbing boulders, forget it. Rough roads and rocks are OK if the rocks are the size of a fist," said BMW spokesman Gordon Keil.

And if you're wondering about fording a stream, bring along a yardstick because you run the risk of leaving your $31,000 investment in water deeper than 18 inches.

X3 comes with a low center of gravity and is meant to sit closer to the pavement for more stability on the highway.

So, you enjoy the smooth ride and handling that is typically BMW nimble and agile, which is good because most driving is conducted on pavement rather than over fist-size rocks or through 18-inch streams.

The X5 is sized and meant to perform as if it was a member of the 5-Series sedan lineup, the X3 as if it were a member of the 3-Series sedan lineup. The fact the X3 is about 600 pounds lighter than the X5 also contributes to its pinpoint maneuverability.

The X3 comes with four-wheel anti-lock brakes and dynamic stability control (DSC) standard. DSC is a traction/stability system that uses lateral movement sensors to automatically correct for understeer or oversteer by applying the ABS and/or reducing the throttle to keep you in control in corners . It worked excellently with no drift, wander or slip.

X3 also offers electronic brake proportioning to adjust front- to rear-brake force and hill descent control to keep vehicle speed under control on downgrades. We didn't get a chance to test those.

The X3 comes with 17-inch all-season radials. You can move to 18-inch all-season radials with the $1,500 sport package that adds a firmer sports suspension, along with a sports steering wheel and sports seats.

The X3 we tested came with the 3-liter, 225-horsepower, 24-valve inline 6 that delivers 214 foot-pounds of torque. Good off-the-line and into and out of the passing lane pep. The 3-liter was teamed with a smooth 6-speed manual. A 5-speed automatic with Steptronic manual-mode shifting runs $1,275.

Though there's plenty of power, the shortcoming is fuel economy--17 m.p.g. city/25 m.p.g. highway with manual, 16/23 with automatic.

The base 2.5-liter 6 develops 184 h.p. and 175 foot-pounds of torque and doesn't get much mileage, either--17/24 with manual, 17/23 with automatic.

BMW says the 2.5-liter will accelerate from zero to 60 m.p.h. in 8.6 seconds with manual, 9.3 seconds with automatic. The 3-liter cuts that to 7.6 seconds with manual, 7.9 seconds with automatic.

Though the dimensions are somewhat smaller than an X5, the cabin feels roomy, and the cargo hold is spacious. A pull-out shade covers contents from prying eyes. A cargo net will keep items from moving but runs $150.

Good wiggle room front and rear. If you need to haul more, second-row seats fold flat to expand cargo space. There are also two stowage bins in each front door, a single bin in each rear door for gloves, cell phones and the like.

The test vehicle came with the $2,550 premium package that includes a glass "panoramic" moonroof that provides open-air motoring over the front seats and a view through the glass over the second row.

The premium package was to run $3,300 and include BMW Assist, an emergency satellite communication system that sends a warning to medical personnel if an air bag deploys. But that system isn't ready yet, BMW said, and will be added later in the model year.

BMW says X3's rivals include the FX35 from Infiniti, RX330 from Lexus, XC90 from Volvo and Touareg from Volkswagen. In terms of smooth ride, sporty handling and quick movement, the XC90 and Toureg seem its closest rivals. The RX300 is a more distant rival designed more for luxury touring than spirited motoring.

Base price of the 3.0i tested is $36,300.

Standard equipment includes rain-sensing wipers, heated outside mirrors, tilt/telescoping steering column, power seats, split folding rear seats, dual threshold front air bags, side curtain air bags front and rear, side-impact air bags (optional rear seat), automatic climate control with micro air filter, AM/FM stereo with CD player, rear window wiper/washer and a power plug in the cargo hold.

Options, such as the $2,550 premium package, $1,550 sport package or $750 cold-weather package (heated seats, headlight washers, ski bag) can quickly make the sticker bulge.

So, too, will individual options such as automatic at $1,275, moonroof at $1,350, leather upholstery at $1,450, heated seats at $500, Xenon headlights at $800, navigation system at $1,800, tinted privacy glass at $350 and heated steering wheel at $150.

BMW sells about 40,000 X5s annually and is counting on an equal number of X3s each year.

The automaker's goal is to top the 300,000 annual sales mark in the U.S. with BMW and Mini combined. It came close in '03 with combined sales of about 276,000 units.

With the addition of the X3 along and a new 6-Series sedan for '04 that comes out in March, BMW expects to achieve its sales target.


2004 B MW X3 3.0i

Wheelbase: 110.1 inches

Length: 179.7 inches

Engine: 3-liter, 225-h.p., 24-valve, inline 6

Transmission: 6-speed manual

Fuel economy: 17 m.p.g. city/25 m.p.g. highway

Base price: $36,300

Price as tested: $41,475. Includes $2,550 for premium package with glass moonroof, auto-dimming rearview mirror and leather upholstery and lumbar-support seats; $1,800 for navigation system; $350 for tinted privacy glass; and $475 for titanium silver metallic finish. Add $695 for freight.

Pluses: A more affordable BMW sport-utility vehicle in what some might call a sensible size. All-wheel-drive with traction control, plus dynamic stability control and anti-lock brakes. Spacious cargo hold. Very good ride and handling.

Minuses: Lots of high-priced options, such as $1,275 for automatic.