BMW's Xpresso machine

The X3, according to BMW, is a premium medium "sports activity vehicle", delivering quality plus agility to a new class of machine more compact than the top-selling X5.

This five-door, all-wheel-drive wagon arrives with a premium price tag, starting at $65,300 for a 2.5 litre X3 with six-speed manual transmission.

And differences between the X3 and its larger, heavier and pricier big brother include the smaller wagons' even more encouraging agility.

The X5 is a very fair machine for pushing up or down a tight mountain road, dirt or tar. The X3 takes that nimbleness and on-road dynamics to another level.

There may be discussion about the new wagon's style – it can look a tad frumpy from some angles and in some colours.

Yet there was little doubt about the X3's all-drive ability on very ordinary snow-blown and iced tracks across the northern highlands of Tasmania as the launch program headed for the hills to exhibit the machine's "all-reasons, all-seasons' capability".

Most of the X3's surefootedness arrives with BMW's clever xDrive system, allowing quick and infinite variations in distributing, and re-distributing, drive.

On the back of the X3's abilities and packaging, plus the success of the X5 (100,000 were built last year), BMW Australia believe this X3 will draw a bunch of new customers to the brand.

Supply, not demand, will be the issue with about 1000 expected to be delivered over the next six months and 1500-2000 sales predicted for next year.

Customers will be younger, more active individuals than X5 buyers according to BMW, already holding more than 250 orders.

The X3 sits 4.5m long, 102mm shy of the X5 and on a shorter wheelbase. The roofline is lower and narrower than the X5 yet retains 201mm ground clearance.

The cabin is familiar BMW territory, feels like a narrower X5. Seating, ergonomics and instrument layout are efficient and intuitive although electric seat adjustments are a $2750 option (BMW's options list and pricing is also quite familiar).

An optional sports package, with firmer suspension, brings fancier alloy wheels plus leather sports steering wheel and seats.There's decent room for four adults (seat belts for five) and luggage although the back seat's backrest feels on the firm side. There is the usual list of cubbyholes a 500kg payload and space for a pair of mountain bikes, sitting above the spacesaver tyre.

Power for the X3s is supplied by a pair of enthusiastic engines; the six-cylinder 2.5 litre produces 141kW, the six-cylinder, 3 litre develops 170kW.

For the 2.5 there's the choice of six-speed manual or five-speed Steptronic automatic. The six arrives with the Steptronic.

BMW here expect the 2.5 litre to be the more popular over the life of the X3.

The more sporting driver may well favour the 2.5 litre manual X3, a highly satisfying sports wagon weighing in at 1740kg.

For as competent as the X3s' all-drive system proved on ice and snow (as other travellers slithered out of control into snow banks) it was the 2.5 X3's ability to be thrown hard at a winding, drying mountain road which helped highlight the xDrive system.

The 3 litre, with a charming yowl, is that bit quicker, jumping from a standstill to 100km/h in a claimed 8.1 seconds, compared with the smaller engine (with manual) arriving in 8.9 seconds.

But with the six-speed manual and the four's unerring willingness to head towards that redline, this is one fun, highly competent all-drive wagon with firm, compliant suspension and quick steering.

Both versions win over the X5 in the tight clinches with less weight and less bulk.

And the xDrive system, now fitted to the updated X5 series, plus BMW's stability control, again proves its subtle sophistication.

Rarely does the driver feel the drive-line correcting loss of grip, understeer or oversteer. It is a very confident machine.

BMW reckon this is a proactive system – recognising a driver's intent by throttle position before there's slip.

The system uses information collected by sensors for BMW's Dynamic Stability Control, electronics monitoring yaw rates, steering angles, road speeds and loss of grip.

A multiple plate clutch stays almost 100 per cent locked up until 20km/h, then distributes the drive between the axles as needed, staving off understeer and oversteer in fractions of seconds.

For instance acute understeer could see the system deliver all drive to the rear axle; at parking speeds – low revs and big turns – the system again switches to rear drive; and once over 180km/h, all the drive goes to the rear wheels.

On the snow and ice, xDrive kept the X3s moving at a reasonable, reassuring clip with little fuss while the monitor kept flashing a 3 degree ice warning. The only concern is adjusting braking distances on the ice.

There is also Hill Descent Control and a clever Trailer Stability Control which recognises a swaying trailer and brakes the X3's wheels while momentarily reducing engine power.

First impressions suggest BMW's X3 is a good job in an appealing, if expensive, package. There is a deal of encouraging sportiness on the road plus a good deal of assurance when road conditions turn nasty.

Just a pity the body style may take some time to understand.