2026 Best Compact Luxury SUV: BMW X3

Luxurious and practical while exuding BMW's renowned sporty characteristics, the X3 has always been a favourite in its very competitive compact luxury SUV class. Our jury of more than 20 automotive experts from across Canada considered every vehicle in the X3’s segment before voting it as the best in its class, signifying a vehicle they feel confident recommending to their own family and friends as the Best Compact Luxury SUV for 2026.

Now, in its fourth generation, the 2026 BMW X3 was completely redesigned last model year. Like most of the German automaker’s vehicles, one of the X3’s main appeals is its sophisticated power delivery. Mated to an eight-speed automatic transmission and all-wheel drive, both X3 trims use a turbocharged gas engine with a mild-hybrid setup that uses a 48-volt battery and an electric motor to improve fuel efficiency and provide a smoother start-stop system.

The base four-cylinder X3 30 xDrive is rated at a competitive 255 horsepower and 295 pound-feet of torque. Fuel economy is estimated at 8.8 L/100 km in the city, 7.1 on the highway, and 8.1 combined. If you're looking for more performance, the six-cylinder X3 M50 xDrive ratchets up the oomph to 393 hp and 428 lb-ft. A nice surprise, though, is that fuel consumption doesn't suffer too much, with estimates of 9.3 L/100 km city, 7.7 highway, and 8.6 combined.

As AutoTrader Editor-in-Chief Jodi Lai noted in her review, "The X3 surprises with its fuel efficiency, which is excellent considering how much performance it offers". She also found that the mild-hybrid setup gives the BMW an extra boost of instant power, smoothes out transmission shifts and stop-start system transitions.

While the BMW’s silky powertrains help make it our Best Compact Luxury SUV, Lai also found that the X3 hasn't lost any of its “Ultimate Driving Machine” heritage. “The X3 feels very manageable, even in tight areas, and it's smooth and comfortable. It corners confidently and always feels sure-footed,” reported Lai.

The latest X3's redesigned five-passenger cabin also makes it a winner. New customizable ambient lighting gives it the appropriate upscale vibe for a luxury vehicle. And it's functional, too: if you're exiting the BMW and a car or cyclist is driving too close, it will flash red to indicate possible danger.

The BMW’s interior has also been designed with user-friendliness in mind. The majority of the previous generation’s physical buttons have been binned. Instead, you'll find climate and media controls in the touchscreen touch-capacitive buttons. Drivers can operate the system using a rotary dial while driving or with the touchscreen when at a standstill. "The system's logical menu structure makes it very user-friendly and easy to get used to, and you never need too many taps to find what you're looking for," Lai wrote.

From a practical standpoint, the cabin is roomier than any previous X3 generation. All seats deliver long-distance comfort and support when cornering, while back-seat passengers get a surprising amount of head- and legroom. There’s a wide array of small-item storage and cubbies, a large compartment under the armrest, and deep door pockets that fit water bottles. And there's more cargo room than ever before, with 570 L behind the second row of seats that grows to 1,700 L with the seats folded.

As Lai summed it up, "The BMW X3 is a versatile and well-rounded luxury SUV that checks a lot of boxes for someone who might be shopping in this segment. It's a huge improvement over the previous X3, and it's so good that it sets a new benchmark for its class.” That’s exactly what our experts are looking for when voting on winning vehicles.

Manufacturer pricing starts at $63,188 for the 2026 BMW X3 30 xDrive, with the 2026 X3 M50 xDrive starting at $81,188.