Marketed as an SAV or a sports activity auto, the BMW X3 is made by Magna Steyr in Graz, Austria under contract with BMW. The X3, a compact crossover SUV, was shown in 2003 at the Detroit car show as a concept car.

In 2005, 2 years after the opening release of the BMW X3, changes for the auto's exterior and interior were made. The two piece fenders of the prior X3 models were replaced with an one piece front fender. The suspension was also replaced with a softer version. An upgrade to the X3's interior was also made with the omission of the gray carpeting present in all prior X3 models and upgrading it with consistent plastic panels.

A lot of clients were terribly unhappy with what the BMW X3 offers. One of the main issues the consumers and other critics pointed out with the X3 was its overpricing. Many clients and critics alike claim the X3 is a bit overpriced for a sports activity vehicle lacking certain features frequently available on other BMW series including the automatic headlights and the cruise control. Magna Steyr, the designer of the X3 also became one of the main issues regarding certain issues with the X3.Some BMW enthusiasts aren't content having the X3 assembled in Austria and not solely by BMW. Though Steyr has been awarded as one of the highest rated assembly factory, many shoppers and critics are still quite skeptical about how the BMW X3 turned out.

A revised version of the BMW X3 was released in 2006 and is still steadily produced right now. The rear and front fascias were replaced with a redesigned monochromatic material making it achieve a closer similarity to the BMW X5. The interiors of the X3 was also revised and was improved with the installation of new LED lights and other upgrades with the X3's interior. The dashboard also received an upgrade and a sunroof and adaptive headlamps were also introduced. Various special packages for the X3's interior include a cold weather package which offers heated seating.