An updated 3.0-liter six-cylinder engine goes under the hood. Packed with BMW's latest innovations, the engine churns out 260 horsepower and 225 pounds-feet of torque — a 15 percent increase in horsepower over the 2006 X3's engine (hence the change in name from X3 3.0i to X3 3.0si).

A six-speed automatic transmission replaces last year's five-speed automatic; a six-speed manual is also available. Courtesy of the new drivetrains, gas mileage is up between 1 and 3 mpg over the 2006 X3. All-wheel drive is standard.

The engine is potent, starting off with adequate power and coming on much stronger at higher revs. Unfortunately, it's hamstrung by the problematic transmission. The automatic in my test car repeatedly bogged down in lower gears, offering premature shifts before the engine could hit its stride. In stop-and-go driving, it made for awkward starts followed by sudden bursts of unsolicited power. The transmission's Sport Mode, which holds gears for longer periods, mitigated this a bit, but its higher-rev shifts sometimes felt unnatural and strained.

BMW says the transmission is a "learning" one that modifies its behavior depending on the type of driver behind the wheel. Still, even after several of us had driven it — at times attempting to train it — the response remained erratic and not to our liking. The transmission's hiccups may not be common to all X3s, but if you test-drive one make sure to pay close attention to acceleration smoothness from a complete stop.

On the highway, the drivetrain's performance is somewhat better. The transmission can downshift two or three gears to deliver powerful, if high-strung, passing power. It takes a good prod on the gas pedal to get there, though, so onramp acceleration may seem anemic at first.