WOODCLIFF LAKE, NJ - BMW will launch a bigger and better equipped X3 early 2010, but new competition in the small crossover segment means the company won't increase the price, according to Automotive News.

The new X3 "moves upmarket because it is almost as big as the original X5," said Jim O'Donnell, CEO of BMW of North America.

"In terms of product substance, it is better than the current generation," he said. "But we recognize it competes with the [Audi] Q5 and the [Mercedes-Benz] GLK. The competition has gotten hotter since the X3 was originally launched."

That means the new X3 likely will be priced no higher than the $40,525 sticker for the current model. The GLK starts at $34,775, and the Q5 quattro starts at $38,025. Prices include shipping.

BMW has limited imports of the X3 since last year because of the dollar's weakness against the euro. Last year BMW sold 17,622 X3s in the United States, down from 28,058 in 2007. This year it will sell about 6,000 units, O'Donnell said.

"We can't live with today's volume," he said. "We have been laid back in terms of the X3 in 2009 because, I think, three years ago we pushed it too hard. We put too much support behind it in terms of leasing. Now we have decided to back off."

The new X3 will be built at BMW's plant in Spartanburg, S.C., starting later this year. The current X3 is made by supplier Magna Steyr in Austria.

"With production being in Spartanburg, we have a better cost base," O'Donnell said. "The U.S. will be the major market."

Meanwhile, BMW's 1-Series-based X1 crossover is due early 2010. The X range also gets a four-door crossover late 2009 based on the 5 Gran Turismo concept shown at the Geneva auto show in March.

O'Donnell sees limited sales for the X1. "If you don't have a requirement for much space in terms of luggage, then it's perfectly acceptable," he said.

The crossover based on the 5 Gran Turismo will be a niche vehicle, priced above the 5-Series sedan.