The BMW X3 is such a car. It's a smaller, slightly cheaper version of the X5 and taps into a market segment that seems to have an unshakeable – and slightly unhealthy – hold on motorists.

Just as long as these gluttonous, fuel-sucking beasts keep on appearing, preferably with a fancy badge on the front, the public seem to lap them up greedily, irrespective of economy, practicality or intended use.

It is part of the range BMW calls a sports activity vehicle, which is an awkward piece of marketing mumbo jumbo intended to differentiate them from the equally clunkily-titled pigeonhole of sports utility vehicle.

The X3 is an SAV rather than an SUV because 'utility' is a rather grubby word and a redundant action for a BMW. The firm recognises that the car will see little service off-road, but has nevertheless engineered a more-than-capable off-road set-up in its xDrive system.

I don't agree with the criticism cars such as the X3 attract about being a Chelsea tractor and only used to take kids to school and back. If I had kids, I would no doubt come to the conclusion that transporting them about in the heaviest, sturdiest metal box I could find, and one that gave us the best chance of survival in a collision, was a good idea.

There are 6,000 X3s earmarked for the UK this year, 10,500 next year and 12,000 at its peak in 2006. BMW reckons 2006 could be the best year, because Mercedes-Benz, Audi and Volvo are all likely to have competitors from then on and the Land Rover Freelander should be into its second generation.

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Residuals are heroic. According to CAP, not a single model dips below 50% over three years/60,000 miles, with the cheaper 2.5-litre models the best at 52%. And the diesel isn't out yet, which should be even better.

At launch, there will be two petrol engines available, a 192bhp 2.5-litre and a 3.0-litre with 231bhp. The smaller engine comes with the option of either manual or automatic transmission, but the larger unit only comes in automatic.

Diesel 2.0-litre and 3.0-litre powered cars will arrive towards the end of 2004 into 2005. It would seem an oversight not to have diesel versions at launch, but the Honda CRV manages to be the second-highest selling small SUV in the fleet market without a diesel variant, so it shouldn't hinder the X3 unduly.

Prices start at a hefty £28,715 on-the-road for the 2.5i SE manual, which is more than £2,000 more expensive than the top of the range Freelander, and about the same price as the bigger and higher-specced Lexus RX300.

All X3s get the full alphabet of drivetrain electronics: ABS, ASC, ADB-X, CBC, DBC, DTC and HDC, which are basically there to keep you on the straight and narrow, while all get CD player, Park Distance Control front and rear, cruise control and a multi-function steering wheel.

From a fleet point of view, all cars are in the highest tax band, and all have suitably thirsty mpg reading of 25mpg or lower, so there isn't a clear financial winner until the diesel comes along.

But the fact is that BMW GB is confident it will sell every model it will get hold of, suggesting that price is not the going to put people off this car. And it's going to still be worth half its value in three years anyway, although contract hire firms are quoting a year for delivery already, so get that order in quickly.

The interior of the X3 is taken from the second team parts bin at BMW, which isn't necessarily a bad thing, but it doesn't get the iDrive infotainment system or some of the plusher materials and the new fancy indicator stalks.

The surfaces are covered in a more rugged, craggy texture than purely on-road BMWs, which can look a bit drab if the central panel and top of the dashboard are both black, but overall there's nothing wrong inside, and the seating position is high and comfortable, and the steering adjusts for all sizes.

On the outside, the X3 looks pretty much what it is: a smaller X5. Except for the black plastic bumpers.

BMW claims these are to make the car look more hardy and ready for a spot of serious off-roading, but actually they just look cheap and smack of cost-cutting.

It's no surprise that the best looking cars were those in black, where the bumpers didn't show up as much.

The xDrive system, BMW reckons, can react quicker to changing road conditions than a normal four-wheel drive set-up.

This is down to the use of an electrically activated multi-plate clutch which can switch the distribution of drive from axle to axle, and the use of Dynamic Stability Control to monitor and predict traction levels.

A traditional centre differential sends drive to the wheels with less resistance, which in an off-road situation generally means the tyre spinning in mid-air or gripless mud or ice. In this system, the wheels that have got traction get all the torque.

But it doesn't just operate in off-road conditions. BMW reckons the system gives drivers peace of mind on-road, as when anything untoward happens – aquaplaning or skidding on black ice – xDrive will start working to get traction to the tyres with most grip.

One of the more unheralded aspects of the X3's abilities is Trailer Stability Control which uses the car's DSC to monitor forces that suggest that Dobbin's trailer is starting to sway dangerously on the way to the gymkhana and applies brakes where necessary to keep Lucinda's pony in an upright position.

Apparently a quarter of all X5s have towbars, and the X3 should be no different.

Behind the wheel

It comes as no great surprise to find that on Tarmac, the X3 does the business. The X5 was a real eye-opener when it was launched for its ability to do a passable impression of the 5-series and the X3 is more of the same.

Like most SU/SAVs nowadays the X3 has a unitary, monocoque structure like a car rather than a body on frame structure that real swamp donkey machines have. This means that the structure for the X3 is rigid and more car-like, and allows it to handle better, while keeping a decent level of ride comfort.

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The X3 is fine on the straight although the damping is surprisingly firm for a car of this type and it corners with a lot less body roll than you expect from your lofty perch.

The 2.5-litre engine will be more than adequate for most customer's needs, in either manual or automatic options. The 3.0-litre obviously has more go, but the difference between the manual 2.5-litre and automatic 3.0-litre is not great. BMW also kindly provided a half-decent off-road course to prove the car's mud-plugging abilities.

I always regard these little exercises with some scepticism having done some SUV launches where the 'off-road' course could have been negotiated by a Lamborghini on slicks, but this Highland mudbath actually had some gradient and need for decent axle articulation. The X3 passed through it easily.

It might not be as capable as some more focused off-roaders when pushed to its limit but this trial was as tough as you would imagine any X3 is ever likely to face and it sailed through with lots of grip, decent clearance and felt safe and predictable. Job done.

Driving verdict
The X3 has the looks, the capability, the image and the badge. It will be flying out of showrooms and into user choosers hands – but expect long waiting lists.

Fact file
Engine (cc):	2,494	2,979
Max power (bhp/rpm):	192/6,000	231/5,900
Max torque (lb-ft/rpm):	181/3,500	221/3,500
Max speed (mph):	129	130
0-62mph (sec):	8.9 (9.8)	8.1
Comb fuel consumption (mpg):	25.2 (23.7)	23.3
CO2 emissions (g/km):	272 (289)	293
Transmission:	6-sp man and	5-sp auto
Fuel tank capacity (l/gal):	67/14.7
Service interval (miles):	variable
Prices (estimated):	£28,715 - £33,115
On sale:	Now

Engine (cc): 2,494 2,979 Max power (bhp/rpm): 192/6,000 231/5,900 Max torque (lb-ft/rpm): 181//3,500 221/3,500 Max speed (mph): 129 130 0-62mph (sec): 8.9 (9.8) 8.1 Comb fuel consumption (mpg): 25.2 (23.7) 23.3 CO2 emissions (g/km): 272 (289) 293 Transmission: 6 sp manual/5 sp auto Fuel tank capacity (l/gal): 67/14.7 Service interval (miles): variable On sale: Now Prices (OTR): £28,715-£33,115