The new X3 picks up where the outgoing version left off, keeping its title as the best-driving compact SUV. But the redesigned model ratchets up the comfort and luxury factors thanks to a more pampering cabin and reduced noise.

The BMW’s turbocharged four-cylinder engine delivers ample power that’s polished and nearly immediate when you hit the accelerator. Yet at 24 mpg overall, the X3 is among the most economical compact luxury SUVs.

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The superbly smooth and responsive eight-speed automatic transmission works well with the X3’s standard all-wheel-drive system. That polished powertrain helps make the X3 a thoroughly engaging SUV to drive, as does its responsive and secure handling. The suspension absorbs bumps well, even though the ride quality skews to the firm side. Outside noises are impressively muted.

We love the interior’s array of high-quality materials and their impeccable assembly. Even the cargo area is nicely finished.

The standard 10-way power front seats are firm and supportive, and provide all-day comfort. Hop in the rear seat and there’s plenty of space for two adults.

Controls are relatively easy to learn, including the now simplified iDrive infotainment system. But it takes time to get accustomed to using the electronic shift lever.

Automatic emergency braking isn’t standard, a big oversight on a redesigned vehicle that starts at more than $40,000.

Read the complete BMW X3 road test.

BMW X3

HIGHS: Handling, braking, quietness, front-seat comfort, fit and finish, fuel economy
LOWS: Operating the gear shifter takes some getting used to
POWERTRAIN: 248-hp, 2.0-liter four-cylinder turbo engine; 8-speed automatic transmission; all-wheel drive
FUEL: 24 mpg on premium fuel
PRICE AS TESTED: $53,745

Editor's Note: This article also appeared in the March 2018 issue of Consumer Reports magazine.