ATLANTA – BMW AG has a weak link in its product chain, but not for long. Its X3 cross/utility vehicle arrived in 2004 and, during its honeymoon with consumers, earned respect within the BMW portfolio, with 34,983 deliveries in 2005. But it’s essentially been downhill ever since.

The aged X3 was in no shape to hold its position in 2009 when the Audi Q5, Cadillac SRX, Mercedes GLK and Volvo XC60 all arrived new to the market.

The bleeding turned to hemorrhaging in 2010, when the X3 placed 14th among 17 vehicles in Ward’s Middle Luxury CUV segment. In no other sector was BMW so utterly annihilated by the competition. The No.2 SRX outsold the X3 10-to-1 in 2010, according to Ward’s data.

But everyone loves a good comeback story, and the bosses in Bavaria look forward to hearing one now that the all-new second-generation X3 is arriving in U.S. showrooms.

Much is riding on the new X3, including a $750 million expansion of BMW’s sole North American plant in Spartanburg, SC, to assemble the CUV. Until now, Magna Steyr Fahrzeugtechnik manufactured the X3 in Graz, Austria.

Localizing vehicle assembly is a smart way to skirt currency fluctuations, so adding the X3 in the U.S. not only boosts profitability but also leverages a competitive edge against its European rivals, all of them imported.

Manufacturing aside, the new X3 makes a convincing business proposition with its emotive sheet metal, world-class engines, rock-solid driving dynamics and comfortable (albeit predictable) interior.

Where the previous X3 was teutonic and squarely proportioned, the new X3 is more angular, with softer edges and a more steeply raked windshield and liftgate to convey car-like proportions.

Along the profile, the beltline swoops and rises from front to back, while the beltline on the old X3 was nearly horizontal and plain.

The grille stands more upright than in the previous X3, allowing the trademark twin kidneys to gain prominence as the hood contours around them.

The headlamps are thinner and more wedge-like, and the entire front end relies more on body color than black cladding, which enhances styling continuity.

From the back side, the new X3 looks nothing like its predecessor, which relied on a series of horizontal lines and 90-degree intersections where the liftgate met bumper and glass met sheet metal.

But the back end of the new X3 – like that of the new 5-Series sedan – is a stunning array of sloping, curving lines on the liftgate, rear window and taillamps, and the addition of body color below the black plastic bumper fascia completes the look.

When the X3 first launched in 2004, initial customers complained the base 184-hp 2.5L inline-6 wasn’t quite enough to deliver “Ultimate Driving Machine” credentials. That engine ultimately was dropped.

’11 BMW X3 xDrive35i
Vehicle type Front-engine, AWD, 5-passenger CUV
Engine 3.0L turbocharged DOHC DI all-aluminum I-6
Power (SAE net) 300 hp @ 5,800 rpm
Torque 300 lb.-ft. (407 Nm) @ 1,300 rpm
Transmission 8-speed auto
Wheelbase 110.5 ins. (281 cm)
Overall length 183 ins. (465 cm)
Overall width 74.1 ins. (188 cm)
Overall height 65.4 ins. (166 cm)
Curb weight 4,222 lbs. (1,915 kg)
Base price $41,925
Fuel economy 19/26 (12.3/9 L/100 km)
Competition Acura RDX; Audi Q5; Cadillac SRX; Infiniti EX35; Lexus RX350; Mercedes GLK; Volvo XC60
Pros Cons
Exterior styling upgraded dramatically Interior nice, but too familiar
N55 I-6 sets high bar for rivals Lots of ground for X3 to regain
8-speed auto, AWD standard Steering ponderous on highway

The new X3 comes with two standout engines, both more than capable of motivating the CUV. The base 240-hp 3.0L naturally aspirated, port-injection N52 I-6 in the xDrive28i carries over from the previous X3, but is detuned for better fuel efficiency.

New this year across the BMW lineup is the direct-injection N55 I-6, which delivers 300 hp and 300 lb.-ft. (407 Nm) of torque via a single twin-scroll turbocharger in the xDrive35i.

Recently named a Ward’s 10 Best Engine for 2011, the N55 quickly has become a versatile weapon in the Bavarian arsenal, powering the highest-volume vehicles in the portfolio – the 3-Series and 5-Series sedans, including the larger 5-Series Gran Turismo.

The N55 is a perfect fit for the X3. Combined with the standard new 8-speed automatic, this powertrain pushes the CUV to the head of its class for its manners on the highway and in the city.

The N55 soundly trounces every rival in horsepower and torque, even the larger, naturally aspirated 3.5L VQ V-6 in the Infiniti EX35.

Plus, the N55 delivers the best fuel economy in the segment, with an estimated Environmental Protection Agency rating of 19/26 mpg (12.3/9 L/100 km) in city/highway driving.

Our test drive here confirms the rating, achieving nearly 24 mpg (9.8 L/100 km) in mostly highway driving.

No matter the task, the N55 goes about its business effortlessly. For a thrill, while cruising on the highway in “normal” mode, switch to “sport” mode and listen to the transmission kick down a gear while the RPMs rise. The accelerator suddenly becomes more sensitive and responsive.

Not to be overlooked are the excellent 8-speed and xDrive intelligent all-wheel-drive system, both of which are standard on all models. Among rivals, 6-speed automatics are the norm and AWD generally is optional.

The 8AT offers taller cruising gears to enhance fuel efficiency, while enabling direct shifts from eighth to second gears for maximum acceleration.

The third-generation AWD system usually apportions 60% of torque to the rear wheels, but the torque split is steplessly variable, depending on driving conditions and throttle inputs.

The chassis management system integrates BMW's Dynamic Stability Control with the xDrive system, allowing quicker response and improved handling.

The suspension has been completely redesigned for the new X3, combining double-joint spring-struts in front and a multi-link configuration at the rear.

Dimensional changes enhance handling. Compared with the previous model, the new X3 has a longer wheelbase, wider track and lower height, with nominal weight gain.

Off-road, the CUV feels right at home, holding gravel well and exhibiting minimal body roll on a rally-like backwoods driving course. The hill-descent function is worthwhile, allowing the vehicle to navigate downhill grades as if in cruise control, at speeds up to 15 mph (24 km/h).

On pavement, the wheels stay firmly planted during aggressive cornering, and the Servotronic speed-sensitive electric power steering (same as on the 5-Series sedan) is well suited for dynamic driving.

The only drawback is noted on the highway, when the electric steering occasionally feels ponderous, allowing the X3 to seemingly drift within its lane rather than hold a steady line. Perhaps this issue has been addressed in recent weeks as the production launch neared.

The X3 reflects the familiar interior appointments found inside every BMW, from the meaty leather-wrapped steering wheel and rectangular color display screen to the firm seats and brushed-aluminum trim.

The back seat accommodates three, and headroom is plentiful, even for an adult of average height in the center. The second-row seat does not slide fore or aft, but legroom is ample, with an extra inch of space when compared with the outgoing X3.

We've said this before about BMW interiors, but it bears repeating: They all look the same. Yes, they are pleasing to the eye, but a 3-Series is a long way from a 7-Series in terms of price – less so with regard to interior styling. Hopefully, future models will offer more diversity.

But overall, the new X3 is a tremendous value, offering significantly upgraded technology while undercutting the sticker of the previous model by $2,100.

Competitively priced, the base xDrive28i starts at $37,625 and is expected to sell in higher volumes than the turbocharged xDrive35i, which starts at $41,925.

Expect some fireworks in this segment in the coming months as BMW most certainly will reclaim valuable market share surrendered in recent years.

The Bavarians are back in the game. The weakened link in the chain has been fortified.