BMW's New, Improved X5

With a new third-row seat and more powerful engines, the X5 is bigger and better than ever. Too bad about that i-Drive&

Editor's Rating:

The Good: Great looks, terrific handling, impressive acceleration (on the 4.8i), three rows of seats

The Bad: A bit cramped, steep price, and the i-Drive

The Bottom Line: It's easy to see why it's BMW's second-best-selling model

Up Front

More power or more money? That's the age-old dilemma that faces so many car buyers these days, and nowhere is it more keenly felt than when shopping for the BMW X5. That's because drivers need to choose between the less-expensive and under-powered 3.0si model with a V6 engine and the pricier, more powerful 4.8i version with a V8. The price difference is almost $10,000, and the V6 offers better fuel economy. What to do?

Well, a certain cross-section of the population will say that the right thing to do is not buy any fossil fuel-burning car at all and get a bike or a horse instead. Fine, that's cool. We love the planet, too, but don't think that this is a real option for most people. (Imagine taking your kids to hockey practice on a bike….)

No, most people will wrestle with their conscience and their bank account, and come up with the answer. Maybe we could help out a little. If you're contemplating the X5 and can afford the 4.8i, our advice is pay up for a better car.

Here's why: The V6 version, which starts at $45,900, gets a measly 17 mpg in the city and 23 mpg on the highway. That's pretty much in line with every other midsize spot-utility vehicle on the market—and yes, we know BMW likes to call it a "SAV," or "Sport Activity Vehicle," but that smells like a creature of the marketing department rather than the engineering department to us. The 4.8i, which has a MSRP of $54,500, however, gets a slightly worse 15 mpg and 21 mpg, respectively—but with so much more power. Since the difference in fuel economy is negligible, why not have more fun driving?

Since its introduction in 1999, the X5 has been a hit for BMW. At a time when SUV sales are down, sales of the X5 are up. In fact, it remains BMW's second-best-selling product line in the North American market, after the entry-level 3 Series. For the first three months of 2007, BMW sold 9,069 X5s, up more than 26% from the same period last year. To put that in perspective, over the same period, sales of Ford's (F) redesigned and commendable Explorer, the one-time king of the SUV market, sank 25%.

Still, BMW lags the $37,400 Lexus RX 330/350, which sold more than 6,600 over the same period. However, that number is off 4% from the same period in 2006.

So what makes the X5 such a hot ticket? To find out, read on.

Behind the Wheel

I have reviewed three iterations of the X5 over the years—the 2002, the 2005, and now the 2007. For the '07 model, there's a lot that is new, some good and some not-so-good. The good is the introduction of an optional third-row seat for $1,700 and $1,200, respectively, in the 3.0si and the 4.8i. This is a nice addition, one that makes the X5 more competitive, not to mention utilitarian for the family demographic that is its largest audience. The advantage is clear: In the past, if you needed to ferry more than three kids to school, practice, or the mall, the X5 couldn't do it. Now it can.

(That said, the third row is not exactly without compromises. True, when it's being used, you can squeeze in up to seven adults, but you better hope they don't have any luggage because, with the third row deployed, there's almost no internal cargo room. If you've got a really big family, you may want to check out a behemoth like the Chevy Suburban.)

What's also good is that the 2007 version been redesigned inside and out, freshening it but not making it radically different from previous incarnations. There's now more head and shoulder room, and the length has been increased nearly 9 inches, to just over 191 in., the better to incorporate the new third row.

Another difference is that the 4.4-liter engine has been discontinued; the 2007 model comes in only two versions, the 3.0si and the 4.8i, both of which are faster and more fuel-efficient than the 2006.

The not-so-good is the introduction of the justifiably maligned i-Drive to the X5.

The 2005 version was blissfully i-Drive-free, but the powers that be at BMW are sticking to their guns and inserting the onboard haptic computer system despite near-universal irritation with it. Unlike the so-called Bangle Butt, the rear-end styling named for BMW designer Chris Bangle, which was introduced on the 2002 BMW 7 Series to much gnashing of critical teeth, the i-Drive hasn't won over the majority of its detractors. And it hasn't evolved the design language, as the Bangle Butt has. Today a pre-Bangle BMW looks dated, while the i-Drive ranks up there with car alarms among ideas that were misguided from the start.

The reason, for the benefit of readers who haven't experienced it firsthand, is that the i-Drive is so needlessly complicated. I have now driven many BMWs so equipped and no longer feel so befuddled trying to use the device. Now I just resent it, because there are plenty of other—and cheaper—cars that allow me to perform the same tasks, such as finding a radio station, locating nearby points of interest, and turning on the air conditioner, far more easily.

On top of that, the navigation is strangely unintuitive. Compared with, say, the $26,000 Ford Explorer, which has an excellent navigation system, BMW's is almost too busy to bother with. Good luck if you get lost and you've never used it before.

The problem stems from the curious desire of marques such as BMW and Mercedes-Benz, which made their reputations on the excellence that their engineers displayed in creating cars that drove magnificently, to also become recognized for developing cutting-edge technology. In the luxury auto market, such technology can be highly prized because it allows one brand to differentiate itself from the competition and emphasize its exclusivity. Unfortunately, while this strategy has been successful for the most part, it also has moved the makers away from their traditional core competencies, with such consequences as a spike in recalls, reliability problems, and overengineered gadgets like the i-Drive.

But where the Bimmer really excels is driving. Forget all the gadgetry. This is one smooth-driving and fun car. (We're talking about the 4.8i version now. It's hard to get too excited about the 3.0si.) Thanks to its new double-wishbone multi-link suspension and Dynamic Stability Control—which enhances driving performance by coordinating traction control, braking, and cornering—as well as a lower center of gravity, the X5 has a much more car-like ride than its predecessors. Previous incarnations could be zippy but tippy. Braking is also improved, as is the new, more responsive six-speed automatic transmission standard on both models.

Buy It or Bag It?

The 4.8i is the model to choose if your budget allows for it. The only reasons you might not go for it: a) You can't afford it, or b) you have too many kids and don't want to strap all your bags to the roof.

If, however, you happen to fall into the former of those categories, we would like to recommend the excellent Acura MDX,, which has a MSRP of $40,665. While it may lack the refinement and speed of the X5, it stacks up nicely in nearly every other respect.

Alternately, you could buy American and once again we mention the Ford Explorer, which costs almost half as much as the 4.8i.

And if you wanted the status of a BMW but still feel a pang of conscience about driving such a gas-guzzler, you could consider the RX 400h hybrid from Toyota's (TM) Lexus division. Not only does the front-wheel-drive version still cost less than the X5 at $41,500, it gets 32 mpg in the city and 27 mpg on the highway.

But if you have only two kids and plenty of money (and don't think too much about fuel emissions), the X5 is a winner.

Click here to see more of the BMW X5.

Before it's here, it's on the Bloomberg Terminal.