BMW might have considered calling its latest SUV the X2, because that’s where it seems to more properly fit in the Bavarian car-maker’s line-up.

But, hey, Holden already has a handle on that badge (HD owners of the world unite!) so X1 it is then.

Dorky up front but good looking in profile and from the rear – with the very-now horizontal louvered tail-light treatment probably being the car’s best angle – the baby BMW SUV brings a new level of poshness to the popular compact SUV segment. However, the company’s claim of it being the first premium contender is fanciful when you consider that Land Rover’s Freelander pretty much pioneered the segment back in 1997.

Based on the current 3 Series wagon platform, the X1 looks, feels, smells, sounds and probably tastes like every contemporary BMW as a result. Audi originally spruiked the first A3 as ‘Audi in a concentrate’ and the same applies here.

But having the ‘1’ after the ‘X’ is misleading. Don’t go expecting sardine levels of passenger space or a woefully useless boot area because this BMW is the Pepsi Max-slamming, Bear Grylls-aspiring action lifestyle member of the Munich-based family.

Consequently the cabin is perhaps the X1’s biggest surprise, since it is neither compact in feel nor small in scope.

Unlike the current 1 Series hatch, the environment isn’t tight or claustrophobic. For starters, it’s easier to get in and out of (though not brilliantly so if you are an adult sitting in the back), and you are not forever looking to ratchet down the seat-height adjuster. Apparently there’s more headroom in here than in the X3!

Looking around, the interior ambience is like every BMW over the past five years, with no stylistic flourishes nor idiosyncrasies to set the X1 apart from, say, a 3 Series.

But that’s no bad thing if you are moving on up to the brand (and BMW hopes that up to 80 per cent of buyers will be conquests from other marques), since there is nothing ‘compact SUV’ or low priced about the cabin’s presentation. The relationship between this car’s cabin and, say, a 5 Series’ one costing more than twice the price is obvious. This enough will ensure success for the X1.

The family connection also means buyers can spend up big on luxury options such as the iDrive interface system, Performance Control rear differential, 18-inch alloys, satellite navigation set-up and panoramic sunroof (and all these items were fitted to every test car we sampled on the X1’s country Victoria launch), to get that full-fat BMW premium car experience.

Yet, as before, there’s more to the latest littlie from Leipzig than meets the eye.

You will discover plenty of room in all directions up front, rear seat space is adequate, headroom good, and comfort levels are enhanced in the back seat by a reclinable backrest. The fact that you are sitting slightly above normal-sized sedans also helps. Only the X1’s relative narrowness betrays its smallish car origins.

Other plus points include plenty of storage spaces, with provisions for bottles in each door pocket, straps to hold them down, and a cargo area with a configurable underfloor area to hide valuables such as laptops in.

What don’t agree with the poor rear vision (a reverse camera is a must-have option), gawky front-end styling and not-so-premium feeling plastics swathing some areas of the interior. We also experienced a persistent rattle coming from the B-pillar in one of the xDrive20d examples we drove (FYI rego XMG-172, BMW).

We drove only the AWD diesels, so we can’t tell you what the petrol versions (coming in June) are like, but we can reveal that there is little engine noise intrusion into the cabin once the X1 is on the move. When idling, an audible clatter comes from the nose, though.

In the xDrive20d, performance is quite sufficient without being scintillating (a relatively lithe 1500kg kerb weight helps, as does 350Nm of torque), but the economy benefits are obvious and the slick six-speed manual’s auto idle-stop eco technology are impressively seamless.

Yet the volume-selling 2.0d auto is also frugal, averaging an excellent 7.6L/100km in our hands over mostly rural but also some suburban conditions.

However, the xDrive23d is the more enthusiastic powertrain choice, since its extra turbo boost provides smoother and more effortless performance delivery across the whole rev range. That slick six-speed auto gearbox is also another X1 asset, for simply being so creamy and responsive.

The latter engine also better exploits the sedan-like dynamic capabilities that the X1 offers, courtesy of the aforementioned 3 Series Touring’s oily bits underneath.

A tad weighty for some perhaps, the steering is nonetheless satisfyingly direct, and is aided by a tautly sprung chassis of exceptional controllability. Point and go, the X1 is truly the driver’s car of the compact SUV fraternity. Strong brakes and excellent loose-gravel stability (remember our cars featured the optional Performance Control diff to help keep them tracking true on the dirt) are further highlights. As far as a starting base is concerned we can think of many, many worse donor cars than BMW’s executive staple.

Annoyingly we didn’t get a chance to sample an X1 fitted with the standard 17-inch alloys (but you can’t blame BMW Australia for fitting the bigger wheels to its press fleet when there is so much arch to fill – otherwise the car would look under-tyred), so the ride can go from firm to abrupt depending on the road surface.

Road-noise, too, intrudes over certain types of bitumen, but overall the X1 is actually more refined than you might expect in a vehicle of this size and positioning.

Expectations, in fact, were pretty much exceeded all round during our short stint behind the wheel of the xDrive20d and xDrive23d.

The fact is, it drove better, handled more responsively, felt roomier and proved to be more practical than we had first imagined. And the pricing is sufficiently sharp to put the more expensive established compact SUV set on notice.

If a 1 Series hatch is too restricting, and an X3 too expensive (and old), then the X1 might just be the BMW for you. As a result though, they should have stuck a ‘2’ next to the ‘X’ instead.