POWERFUL engines, a superbly comfortable, spacious interior, and a thoroughly enjoyable driving experience mean BMW's latest X3 is a very strong competitor in the so-called compact premium SUV class.

And, while I love its bigger sibling, the X5, it's now so good, it's arguable whether you actually need the larger member of the family. In fact, it's only slightly bigger than the first-generationX5.

As it's based on the 5 Series saloon platform, the X3 now enjoys a longer wheelbase than its predecessor, which means there's plenty of space inside for five occupants. Again, it feels pretty similar to the amount of room offered by its larger sibling.

Up front the driver and passenger are spoiled for space, but there's still room for six-footers in the rear, with plenty of headroom for all. Three-zone climate control, cupholders and ambient lighting mean people back there are kept comfortable.

Typically BMW, the cabin is a lush, comfortable and stylish haven, with leather upholstery, and high quality switchgear, all within easy reach of the driver. The M Sport comes with a 12.3-inch infotainment touchscreen, which sits on top of the dashboard in the driver's eyeline.

Fast and easy to use, it can be controlled, as its name suggests, by touch, voice and even gesture, though much preferable - to me, at least - was by using its rotary dial by the gearlever.

The sat nav system is traffic aware, providing accurate information on the flow of traffic along all major roads, across the UK and Europe. The M Sport also gets a bespoke leather steering wheel, sports seats, 19-inch alloy wheels,LED headlights, and a reversing camera among a cornucopia of other equipment.

The seat backrest folds 40:20:40, and behind it there's a 550-litre boot, which can expand to 1,600 litres with the seat folded.

The 30d gets a sumptuous 3.0-litre straight-six diesel, which is now combined with a new 48-volt mild hybrid system, to provide more efficiency but which produces all the performance you'll ever need served from low revs. It is matched with an excellent eight-speed automatic, which makes slick and swift changes just as you need it to. It officially returns just under 46mpg but I was happy with the 36mpg I achieved.

As it's a BMW you'd expect the X3 to be fun to drive and you won't be disappointed. It handles incredibly well for a high-riding SUV.

The weight is distributed 50:50 front to rear, which helps improve handling. To further improve dynamics, the rear bias of BMW's xDrive all-wheel-drive system has also been increased. Intelligent AWD management allows adjustments to be made as the driving situation demands, while still maintaining maximum traction.

M Sport models also get standard sports suspension, which is firmer than the normal set-up and includes thicker anti-roll bars to improve body control in corners.

The M Sport model also comes with adaptive dampers, which allow you to select how stiff you want the car's suspension to be, using the mode select button that also alters steering, throttle and gearbox settings. You can choose between Eco Pro, Comfort, Sport and Sport+ options. It's surprisingly supple at all speeds and immensely enjoyable behind the wheel.

Because of the aforementioned xDrive system, the X3 is a competent off-roader too. We're not talking Land Rover levels of capability but ground clearance and ramp angles are decent enough, and there's electronic traction and hill-descent control. It also has a wading depth of 500mm for those who want to test it.