BMW: X3 gets bigger, but price doesn't

BMW will launch a bigger and better equipped X3 early next year, but new competition in the small crossover segment means the company won't increase the price.

The new X3 "moves upmarket because it is almost as big as the original X5," said Jim O'Donnell, CEO of BMW of North America.

"In terms of product substance, it is better than the current generation," he said. "But we recognize it competes with the [Audi] Q5 and the [Mercedes-Benz] GLK. The competition has gotten hotter since the X3 was originally launched."

That means the new X3 likely will be priced no higher than the $40,525 sticker for the current model. The GLK starts at $34,775, and the Q5 quattro starts at $38,025. Prices include shipping.

BMW has limited imports of the X3 since last year because of the dollar's weakness against the euro. Last year BMW sold 17,622 X3s in the United States, down from 28,058 in 2007. This year it will sell about 6,000 units, O'Donnell said.

"We can't live with today's volume," he said. "We have been laid back in terms of the X3 in 2009 because, I think, three years ago we pushed it too hard. We put too much support behind it in terms of leasing. Now we have decided to back off."

The new X3 will be built at BMW's plant in Spartanburg, S.C., starting later this year. The current X3 is made by supplier Magna Steyr in Austria.

"With production being in Spartanburg, we have a better cost base," O'Donnell said. "The U.S. will be the major market."

Meanwhile, BMW's 1-series-based X1 crossover is due early next year. And the X range also gets a four-door crossover late this year based on the 5 Gran Turismo concept shown at the Geneva auto show last month.

O'Donnell sees limited sales for the X1. "If you don't have a requirement for much space in terms of luggage, then it's perfectly acceptable," he said.

The crossover based on the 5 Gran Turismo will be a niche vehicle, priced above the 5-series sedan.

"We showed it to our dealers last September in Munich, and the reaction from the dealer partners -- the wives -- was 'That's the car I've always wanted,' " O'Donnell said. "They see it as versatile, but it's definitely not a minivan, and these are people who would not be seen dead in a minivan."

(Source: Automotive News)