BURDENED with having to retain, if not grow, the enviable fan base it has earned over the past seven years, BMW's MkII X5 was always going to be evolutionary, rather than revolutionary.

But as the launch drive through the varied sealed and unsealed roads in the mountains west of Brisbane proved, that doesn't mean BMW hasn't worked hard to perfect an already successful formula.

Beneath the overgrown X3-style exterior sheetmetal lies a profoundly different vehicle, from the vastly stiffer new chassis to the redesigned double-wishbone front suspension and new diesel and petrol engines.

From the driver's seat there's the same commanding driving position (although Q7 and ML/GL drivers will rise well above X5 drivers with their optional air suspension) and a well-crafted, high-quality cabin, with the most discernible difference being the extra overall length and width.

The result is a little more elbow room up front and noticeably more legroom for rear passengers - plus the (expensive) option of a third-row twin-seat for the first time.

Alas, however, with a fiddly second-row seat-folding mechanism and no rear footwell, getting into and out of the rearmost seat is as uncomfortable as sitting in it.

But even if it is only a part-time seat for kids, at least now X5 can carry up to seven occupants if its owners desire it to (around just 25 per cent are expected to). Just don't expect Ford Territory-style stretching room in the third row for your mother-in-law.

Not only is the third row option expensive at $5000 ($3000 on the V8), it also replaces the standard space-saver spare wheel/tyre and the handy 90-litre storage tub below the luggage floor. At the least price includes rear air springs, extra air outlets and a sliding/folding second-row seat.

Of course, cargo-carrying is not what people buy X5s for, so thankfully on-road dynamics and outright performance are improved by a much greater margin.

The stiffer new chassis and front suspension design make the X5 even more agile and the steering even more responsive. Yes, these are incremental gains over the already accomplished X5, but if there was ever any suggestion that new arrivals like the Q7 had matched the dynamic ability of X5, then the newest X5 disproves them.

Neither the base variant's upgraded petrol six or the X5's promising new active damping and anti-roll bar system (Adaptive Drive) were available for test at launch, but we can say the lighter, gruntier new diesel is even more effortless to drive than before and mates well with an even slicker-shifting six-speed auto.

Of course, the muscular new 4.8-litre V8-powered 4.8i flagship is the pick of the bunch when it comes to outright performance, a pleasingly more purposeful exhaust note and instant off-idle throttle response. Average fuel consumption over two half-days of hard driving was also respectable at 13.3L/100km.

But the fact remains that, at $31,500 less, the X5 3.0d's extra midrange torque delivery and cheaper running costs make it hard to go past - even if it doesn't sound as good. For some, however, only a V8 will do.

No, the new X5 isn't without its foibles, such as the inconvenience of having to insert the key and then thumb the starter button (in an SUV of all things), the lack of a full-sized spare wheel and tyre (ditto), the road roar from the run-flat tyres on coarse-chip bitumen, the lack of a manual transmission option for six-cylinder versions and the new balljointed gearshifter, which features fiddly push-button Park selection and can't be put in Drive without the driver's seatbelt on if the driver's door is open.

Of course, none of this changes the fact that the new X5 steers, rides, corners and accelerates more like a sports sedan than an SUV.

Superb body control comes without a major deterioration in ride quality (which is firm but far from jarring) and, despite the vehicle's size, weight and all-wheel drive layout, the steering feels as direct and communicative as many sports cars do. So much so that we wished for a smaller steering wheel.

Eight new "favourites" buttons make using the complex i-Drive cockpit management system easier, but are also an admission the system was too confusing to start with.

Run-flat, i-Drive, starter button and options pricing issues aside, the fact BMW has produced a vastly bigger, more rigid SUV that's quicker, more agile and more flexible inside - and at the same time no heavier and no thirster - speaks volumes for the technology that lurks beneath the subtlely revised bodyshell.

Sure, if seven full-size seats is a prerequisite in your luxury SUV, the Q7 won't disappoint, and if more extreme off-road ability is a necessity, then the GL-class is the way to go. Porsche's facelifted Cayenne also promises more performance and better low-speed ride quality than before, but at a higher price (even in sub-$100,000 V6 guise for the first time).

But if it's performance and roadholding you require from a seven-seater luxury SUV, the best has just got better.