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Cars that produce less carbon dioxide benefit from a lower rate of vehicle excise duty and for company car drivers there are real savings to be made by choosing diesels or hybrids over petrol-engined versions.

Cars are also becoming more fuel efficient which, in the long run, is good news for everyone. But this does not explain our fixation with sport utility vehicles. It's true that the North American market is saturated with them, but it's happening on this side of the pond as well.

BMW sold 6,665 X5s in the UK last year (from nearly 101,000 produced worldwide) and an expected 8,250 this year – the appetite in the UK for gas-guzzling four-wheel drive vehicles is growing.

BMW claims its X5 is actually a sport activity vehicle (SAV) because it has a lower centre of gravity than most four-wheel drive vehicles of its size, and is therefore more agile and athletic.

Except an increasing number of X5 sales have been for the six-cylinder diesel model, and it is not that quick. Last year about 48% of X5s sold in the UK were for the 3.0-litre diesel, outselling the 3.0-litre petrol by 1,000 units, while the two V8 models mustered about 1,200 between them.

Up to now, the common rail diesel boasted 182bhp and 302lb-ft of torque but for the new look (look really hard and you'll spot some subtle changes on the outside) this has been upgraded to 215bhp and 369lb-ft of torque – the same as in the 730d and 530d.

Fortunately, there is no penalty in fuel consumption for that extra grunt. It helps shave two seconds off the 0-62mph sprint compared with the outgoing diesel model.

Meanwhile, the 4.4-litre V8 engine has gained Valvetronic technology (which regulates the valves to increase operating efficiency) with an extra 34bhp and improved fuel economy.

The 228bhp 3.0-litre petrol engine is carried over from the existing model, but there is a six-speed manual transmission for the handful of X5 drivers who choose to change gear themselves.

One major change under the skin is the introduction of xDrive (as in the forthcoming X3), which effectively replaces the centre differential with a special clutch to regulate the drive between the front and rear wheels.

Unlike the previous model, where the split was fixed at 38% front/62% rear, it can now be varied almost infinitely, improving the X5's moderate off-road prowess.

The outgoing X5, along with the Volvo XC90, achieved a five-star occupant protection rating in Euro NCAP's crash tests, and marked a first for SUVs, illustrating that for those inside they are a relatively safe place to be in a collision.

However, the stability features now becoming commonplace are meant to avoid such incidents, and the X5 certainly has its fair share of active and passive safety technology.

A further statistic is that nearly 90% of X5s are Sport models – more expensive than the standard SE – and this is expected to continue in the new model. Later in 2004, the outgoing high-performance 4.6iS will be replaced by a more powerful 4.8-litre version with 355bhp, an estimated 0-62mph time of 6.0 seconds and a top speed of 153mph.

Behind the wheel

APART from a few extra features thrown in as standard, and those minor front-end changes, there is little difference between the outgoing X5 and this revised model. Headlights, grille, bonnet and bumper are all modified, while the rear light clusters now have clear lenses. But the most distinguishing feature of the cars is the extra power and torque on tap in the diesel.

All diesel test vehicles used the new six-speed manual transmission, which really was just for demonstration purposes as more than 90% of X5s are autos. Despite the tricky clutch which made it easy to miss the biting point, the transmission highlighted the lively performance of the upgraded engine.

Whereas the previous diesel felt just adequate in the X5, this one has a definite high-performance feel. BMW's six-cylinder diesel has always been one of the most refined and it still is, but the extra punch is most welcome.

However, the real high-performance cars available for testing were the 4.4i models. The smooth V8 engine is whisper-quiet at low speeds, but gains in velocity and volume once you floor the loud pedal, sending the beefy X5 heading for the horizon.

Next year's 4.8iS will probably feel rocket-powered.

Part of our testing session included dynamic driving around cones in chicane and slalom formations, as well as ABS braking tests on a wet surface. Although the X5 always feels big, it is really surprising how agile it is when you start throwing it around in an emergency. Slaloms at 50mph were child's play, even in the wet.

A moderately challenging off-road course demonstrated the capability of xDrive, and of course, X5s are also fitted with Hill Descent Control, which can be activated in forward and reverse gears and restricts the speed of the car when gravity tries to take control. Few will ever venture off road, but those that do will probably feel at home.

Behind the wheel

DIESEL customers will rejoice in the extra performance at no cost to fuel consumption, while those not worried by such matters will delight in the latest V8 X5. It really can do most of the things a luxury sports saloon and an off roader can do, and looks likely to strengthen its position in the UK market.

X5 fact file
Model: 3.0d 3.0i 4.4i
Engine (cc): 2,993 2,979 4,398
Max power (bhp/rpm): 215/4,000 228/5,900 316/6,100
Max torque (lb-ft/rpm): 369/2,000 221/3,500 325/3,700
Max speed (mph): 130 130 (133) 130/149
0-62mph (sec): 8.3 (8.8) 8.3 (8.8) 7.0
Fuel consumption (mpg): 32.8 (30.1) 22.2 (21.9) 21.6
CO2 emissions (g/km): 229 (250) 307 (312) 317
Fuel tank capacity (l/gal): 93/20.5
Transmission: 6sp man (6-cl models), 5/6-sp auto
Service intervals: Variable
On sale: Now
Prices (OTR): £34,675-£47,525

CO2 emissions and fuel consumption data correct at time of writing. The latest figures are available in the Fleet News fuel cost calculator and the company car tax calculator.

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