The BMW X3 was introduced in the year 2003, designated as a sports activity vehicle based on the BMW 3 series. A number of parts that are used in the X3 are also found in the 3 series. The new vehicle was equipped with the xDrive, a system that ensured equal distribution of power from the engine to all four tires. On introduction, the X3 was available with three engines, the 2.5 liter 6 cylinder, the 3 liter 6 cylinder and a 204 horsepower diesel engine. Though the X3 had a number of good features about it, the model was criticized for a number of failings. The ride on the X3 was not very comfortable especially if one was driving the vehicle on rugged terrain.

In the year 2005 the X3 was refurbished with a more powerful engine and better materials used inside the vehicle. The new vehicle was now being powered by two engines, the 2.5 liter and the 3.0 liter engine, with a smooth inside with better materials. Added to the new engine were six gears that one could use while going forward. The brakes and stability control of the vehicle were improved to facilitate a better response from both the driver and the vehicle in case of an emergency.

The X3 in the model year 2007 got a new engine. The engine is the same as the BMW 3 series. The new powerful engine is an all new 3.0 liter six cylinder engine, which gives 35 more horsepower then the previous engine. The new vehicle comes with a new six automatic gears. BMW has not only changed the engine and the gear system, but also given the vehicle a new look from its outside. There's a new bumper and a new headlight to boot. BMW has also given the vehicle a new brake system and lights in the back to warn drivers following the X3 that the vehicle is going to stop. The BMW X3 has new 17 inch tires, a new look steering wheel and new jacks to play additional music formats like MP3 and IPODs.