BMW doesn't always get it right the first time. Take the X3, for example. When it debuted nearly a decade ago, the company's first compact SUV was obviously inspired by its established and respected X5 sibling. But although it had BMW's trademark athleticism, that first X3 suffered from some subpar interior materials, an overly stiff ride and a high price tag. There was, as the saying goes, some room for improvement. So BMW, looking to make amends, fully redesigned the X3 last year. The superior results carry on into this year, and the 2012 BMW X3 is certainly better for it.

Although this second-generation X3 still provides sport sedan-like composure in the corners, its suspension is compliant enough to take the rough edges off the road. There's even the option of a Dynamic Handling package that also changes the suspension damping, throttle action, transmission shift schedule and stability control calibration to suit the driver's mood and/or road conditions. The interior is as well, with high-quality materials and solid construction. Of course, being a crossover SUV, the X3 also provides the expected traits of all-wheel drive and respectable cargo capacity.

The 2012 BMW X3 is available with two engines, both of which suffer from BMW's silly naming conventions. The entry-level X3 xDrive28i (xDrive is essentially BMW speak for all-wheel drive) provides a fairly spirited drive, while the X3 xDrive35i provides a very spirited drive thanks to its turbocharged, 300-horsepower six-cylinder engine. The X3's eight-speed transmission also deserves special mention for its quick ability to optimize performance. When you need "right now" response it can drop directly from 8th to 2nd gear in one shot, bypassing the gears in between.

Overall, the 2012 BMW X3 is a major player in the small luxury crossover SUV game. But it's not without peer. The Infiniti EX35, for instance, offers similar power and agility for considerably less money. The Mercedes-Benz GLK350 is less athletic but feels more solid. The Audi Q5 provides a smoother ride, while the Volvo XC60 is more family-friendly. Each offers a slightly different take on what the ideal luxury crossover should be. But if you want one with a performance-oriented personality, the 2012 BMW X3 is a great choice.

The 2012 BMW X3 is a five-passenger compact luxury crossover SUV available in two trim levels that correspond to the engine: the xDrive28i and the xDrive35i.

Standard features on the 28i include 17-inch alloy wheels, automatic headlights, foglights, automatic wipers, eight-way power front seats, a tilt-and-telescoping leather-wrapped steering wheel, leatherette premium vinyl upholstery, automatic climate control, cruise control, Bluetooth, BMW's iDrive electronics interface and a 12-speaker sound system with a CD player, HD radio, an auxiliary audio jack and a USB/iPod interface.

The 35i is similar but has 18-inch alloy wheels, adaptive xenon headlights, a panoramic sunroof and wood interior accents.

Options are largely grouped into packages, but several of the items are available separately. The Sport Activity package includes unique exterior trim, 18-inch (28i) or 19-inch (35i) wheels, roof rails, sport front seats, a sport steering wheel and a sport mode-equipped transmission with paddle shifters (35i). The M Sport package is similar but has different wheel styles, blacked-out exterior trim and chrome exhaust outlets.

The Premium package for the 28i includes power-folding/auto-dimming mirrors, the panoramic sunroof, leather upholstery, front seat power lumbar support, additional lighting and more storage features (including nets and tie-down hooks). The Premium package for the 35i adds keyless ignition/entry, a power tailgate and rear window sunshades.

The Technology package offers a rearview camera with top view, front and rear parking sensors, Bluetooth streaming audio, a navigation system (with voice commands and real-time traffic) and BMW Assist emergency communications (with collision notification and enhanced roadside assistance).

The Dynamic Handling package includes adaptive suspension dampers, variable-ratio steering and three driver-selectable drive modes. The Convenience package includes the adaptive xenon headlights, keyless ignition/entry, a power tailgate and rear window sunshades. The Cold Weather package adds heated front seats and steering wheel along with a 40/20/40-split rear seat. The Cold Weather package II includes heated rear seats and headlight washers. There is also a Premium sound package that features 16 speakers and digital sound processing.

A 3.0-liter inline-6 engine powers both 2012 BMW X3 models. The engine in the xDrive28i makes 240 hp and 221 pound-feet of torque, while the turbocharged variant in the xDrive35i is rated at 300 hp and 300 lb-ft. An eight-speed automatic transmission with manual shift mode is standard on both models, as is AWD.

In Edmunds testing, an xDrive35i accelerated from zero to 60 mph in 5.6 seconds, which is about 1.5 seconds quicker than the class average. EPA fuel economy estimates stand at 19 mpg city/25 mpg highway and 21 mpg combined for the 28i, while the 35i actually achieves a slightly better 19/26/21.

Standard safety equipment includes antilock disc brakes, automatic brake drying (useful in rainy weather), front airbags, front-seat side airbags, full-length side curtain airbags, active front-seat head restraints, stability control and hill descent control. In Edmunds testing, the xDrive35i stopped from 60 mph in 123 feet, an average distance.

In crash testing by the Insurance Institute for Highway Safety, the X3 received the highest possible rating of "Good" in the frontal-offset, side and roof strength tests.

With its weight distributed almost equally over its front and rear axles, the 2012 BMW X3 handles with the adeptness that you expect from this German brand. The chassis feels light and the speed-sensitive steering gives the X3 a nimble quality that makes you want to swing it around. The Dynamic Handling package adds different driving modes, though we've found these to be an overly complicated solution to a problem that never existed in the first place.

Yet this athleticism doesn't take away from its ride quality that is comfortable and composed even over rough pavement. When it comes to gobbling up lots of highway miles, it's hard to complain about the X3. The same can be said about its engines. While the base 28i inline-6 delivers competitive power and acceleration for the class, the turbocharged 35i offers a degree of quickness that none of its competitors can match.

The X3's interior will be familiar to anyone who has spent time in a BMW product. Classic analog gauges, sensible ergonomics and a restrained overall aesthetic combine to create a pleasant driving environment. Occupants will feel cocooned within the high-quality materials covering the seats, consoles and dash. Though there is a learning curve involved, the standard iDrive electronics interface is intuitive and one of the best of its kind.

While still considered a compact crossover, the current-generation X3 has swelled to proportions similar to the previous-generation X5. As such, room for front passengers is more than ample, while rear legroom is downright generous. Total cargo capacity with the rear seats folded is 63.3 cubic feet, an average figure for this type of vehicle.