BMW Revamps X3 Model to Compete With Audi

BMW is revamping its X3 model in a bid to catch up with Audi in the U.S. small SUV market.

The X3, a small compact SUV that includes optional in-car Internet access, goes on sale on Jan. 22, Bloomberg News said. The car will take on more than 3 inches in length and 1 inch in width as BMW strives to compete with Audi's Q5 model.

The Audi model is the cheaper of the two, retailing for $35,200, compared with $38,850 for the current X3. Audi is a unit of Volkswagen AG (VLKAY).

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"It's a Q5 segment now," Jim Hall, principal of consulting firm 2953 Analytics, told Bloomberg News. "BMW has to get their position back, and that's tough to do."

The X3 has lagged behind the Q5 this year, selling just 5,036 units in the U.S. market, compared with 16,636 Q5s. The Q5 is now Audi's second-best seller in the U.S. market, after the A4 sedan.

BMW has invested $1 billion in its U.S. operations since 2008. Investments have included an expansion of its Spartanburg factory in South Carolina, distribution facilities and new North American headquarters in New Jersey.