Entry-level luxury is a bit of an oxymoron. How can a vehicle be considered "luxury" if it's also marketed toward a mainstream audience? The all-new 2023 BMW X1 sets out to prove that a low starting price can coincide with a premium experience. BMW introduced its smallest crossover back in 2009 with a rear-drive platform that was fun to drive but didn't offer the upscale feel the brand is known for. The second generation arrived in 2015 with a front-drive platform, increasing practicality at the expense of driving enjoyment.

After the disappointing sequel, this third-generation model bears some big responsibility: prove once and for all that BMW can build an entry-level car that can be at the top of its class. With aging competitors in the Audi Q3, Cadillac XT4, Lexus UX, and Volvo XC40 plus expensive alternatives like the Jaguar E-Pace, Range Rover Evoque, and Mercedes-Benz GLA, the subcompact luxury segment might be ripe for BMW's taking.

The X1 brings more power, better practicality, updated styling, improved technology, and a competitive starting price. CarBuzz sampled the 2023 X1 in Palm Springs, California, and based on our first impressions, this could be the best example yet.

Styling: Upright Handsome

The X1's proportions have changed drastically since the model was introduced over a decade ago. Compared to the previous generation, this new model is 1.7 inches longer (177.2 inches long), 0.9 inches wider (72.6 inches), and 1.7 inches taller (64.6 inches). The additional height is the most noticeable metric, giving the X1 an MPV-like side profile. Of all BMW's latest designs, the X1 seems the least controversial.

Buyers can select from the standard, xLine, and M Sport exterior packages, each of which brings a slightly different flavor. We are very impressed by the X1's color palette of 13 hues, including new ones such as Blue Bay Lagoon, Cape York Green, Utah Orange, Space Silver, and BMW Individual Frozen Pure Grey. Portimao Blue Metallic is pictured above, and it pairs well with the M Sport package. Sadly, all of the colors are optional besides Alpine White and Jet Black. Wheel sizes include 18, 19, and 20 inches.

Performance: Hotter Starting Point

Luxury crossover shoppers likely aren't expecting a hot pocket rocket, but BMW still significantly increased the X1's output. The 2.0-liter TwinPower four-cylinder turbocharged engine now develops 241 horsepower and 295 lb-ft of torque (up from 228 hp and 258 lb-ft) in the base xDrive28i trim. Only the Evoque and E-Pace have more standard power in the class. That power is now routed to a standard xDrive all-wheel-drive system through a new seven-speed dual-clutch transmission that replaces the torque converter automatic. 0-60 mph takes a respectable 6.2 seconds, and fuel economy is rated at 25/34/28 mpg city/highway/combined, which is better than anything in the class besides the hybrid Lexus UX.

Europe receives hybrid and diesel engines as well as an electric iX1 model. Sadly, those won't be coming to the US, but BMW is working on a hotter M35i model with over 300 hp.

Interior: Well-Designed Space

Despite being the least expensive crossover in the BMW range, the X1 includes a spacious and luxurious cabin. The increased dimensions pay dividends inside, where the X1's gargantuan headroom could accommodate Abraham Lincoln's hat. Customers can opt for Sensatec seats finished in Black, Oyster, Black/Red, and Mocha or a Black Alcantara interior with contrasting blue stitching. Trim options include high gloss black, aluminum mesh effect, aluminum hexacube, or a $200 eucalyptus open-pore fine wood. The aluminum mesh effect feels premium and pairs well with the interesting geometric shapes hidden around the cabin.

In terms of technology, the X1 packs BMW's latest iDrive 8 software, which relies entirely on a 10.7-inch touchscreen since the iDrive rotating controller is now gone. Unfortunately, customers will have to pay extra for niceties such as comfort keyless access, wireless charging, surround-view cameras, parking sensors, heated seats, and adaptive cruise control.

The X1 offers 25.7 cubic feet of cargo space behind the rear seats and 57.2 cubic feet with the second row dropped. Only the three-row Mercedes GLB packs more space in the segment. If we had one complaint about the X1's storage, it's that lowering the second row requires pulling three hard-to-reach tabs located in the seat bottoms, which is difficult to do with one hand. There is no way to drop the seats from the trunk. Speaking of the rear seats, legroom is rated at 37 inches, which is generous but falls short of the Mercedes GLA and GLB.

Driving Impressions: Hatch-Like

The previous-generation X1 and closely-related X2 left us wanting more in terms of driving experience. Switching to a FWD platform killed the excitement that was present in the first X1. We are happy to report that the magic is back with this new model. The additional power is noticeable, with peak torque arriving from 1,500 to 4,000 rpm. Shifts from the dual-clutch feel more immediate and help the driver be more connected with the car. A Sport Boost function can be accessed by holding the left paddle, delivering the lowest possible gear for maximum acceleration.

BMW didn't just improve the straight-line acceleration; everything about the X1 driving experience is refined. The steering is sharper than the previous generation, and the ride is smoother (especially with the optional adaptive suspension) thanks to the increased length. The whole car feels more playful and no longer punishes occupants with a firm ride. If this is what BMW could do with the base xDrive28i variant, we can't wait to drive the M35i.

Pricing: Entry Luxury (Options Required)

The 2023 X1 xDrive28i starts at $38,600 (plus $995 destination), making it the cheapest crossover in the BMW lineup. That's a significant price increase compared to the last X1 - which started at $35,400 - but factoring in the standard xDrive, it's only a $1,200 difference. Of course, BMW enjoys nickel and diming its entry-level customers for features that come standard on a basic Toyota, so the average X1 buyer will spend significantly more.

Our Portimao Blue test car included several pricey packages, including the M Sport Package ($2,300), Premium Package ($4,200), and 20-inch wheels ($1,200), plus a few a la carte options pushing the total cost as-tested to $49,095. That's not the steepest pricing in this segment, but it's far from the lowest.

Verdict: Worthy Of Its Badge

We were bitterly disappointed by the outgoing BMW X1 and would have had a tough time recommending it over a cheaper (and larger) mainstream crossover with more available features. Though we still aren't fully convinced by the sub-compact luxury crossover segment as a whole, the 2023 X1 is an improvement in every measurable metric, and it's now one of the best options in its class.

Though it wasn't designed to be the Ultimate Driving Machine, the X1 delivers a hatchback-like playfulness that feels ripe for the M treatment. It's more spacious inside and boasts class-leading technology. Like other models in its segment, the X1 suffers from expensive options that are available for a fraction of the price in a mainstream crossover, but that issue is not specific to BMW, so we can't fault the company too much. If we had to recommend an entry-level subcompact crossover, the X1 would now be right at the top.