BMW's X5 pioneered a new market – one that it still aims to lead from the front, says motoring editor Andy Russell.

When you have been credited with creating a whole new market sector you can't afford to rest on your laurels. And BMW certainly hasn't with it hugely capable, hugely popular X5.

The car, which founded the sport activity vehicle (SAV) sector and ushered in the new millennium, has sold more than 1.3 million worldwide and spawned not only BMW's X family (an X4 joins the X1, X3, X5 and X6 this year) but a host of rivals.

If you're looking at image, desirability and status, then the X5 is still very much top of the pack so little wonder that this third-generation model's styling is evolutionary with the most noticeable change being new air breather slots in the front wings as part of a concerted effort to improve aerodynamics while weight is cut by up to 90kg in the drive to improve economy and emissions.

And on the flagship X5's front wings you also find a small 'M' on the new high-performance model – the M50d. Apart from the twin-turbo 4.4-litre V8 petrol 50i, diesel power dominates. There's a new four-cylinder 2.0-litre 25d, also offered in two-wheel drive guise, and three 3.0-litre diesels – single turbo 30d, twin turbo 40d and triple turbo 50d.

With 740 Newton metres of torque at 2,000rpm, the M50d is quite extraordinary – a two-tonne plus off-roader that blasts off like a sports car, reaching 62mph in 5.3 seconds, yet officially able to top 40mpg although in reality expect 30-35mpg and you have to be very restrained to get high 30s.

It trickles in traffic but a small prod of the throttle has the M50d biting at the bit ready to unleash its awesome 381 horses with a throaty roar as the standard eight-speed automatic slickly goes about its business whether left to its own devices or used manually via the stick or paddles on the steering wheel.

The M50d is devastatingly quick but, despite it size and bulk, surprisingly agile to drive. OK, you're always aware of its size on small roads but on wide, stretches of Tarmac it just hugs the road and flows through corners with a fast, fluid feel.

My test car's optional £2,495 adaptive dynamic suspension played a part in this but I have to say it was appreciated more by me in the driving seat than passengers – combined with optional 20in wheels and wide, low-profile tyres it made the ride firm at best – even in comfort mode – and horribly hard at worst, accompanied by some tyre noise and the fat rubber tends to follow worn tracks on roads which is a little disturbing at first. If you're looking for comfort, lower-powered SE models or more comfort-oriented suspension set-ups would be wise.

Fortunately the cabin is extremely comfortable and tasteful with loads of head and legroom and the biggest issue is getting in and out with the high-rise seating but you are rewarded with commanding views.

The huge 650-litre boot has a high floor but swallows luggage and loading is made easier by the split tailgate with the top section opening automatically via the key, handle or cabin and the bottom section dropping down manually. The boot floor also lifts on a gas strut to reveal a large storage compartment. Rear seat backs split 40/20/40 and lay flat for added versatility, freeing up 1,870 litres of cargo capacity.

Plenty of seat and steering adjustment make it easy to feel at home at the wheel and the driving experience is boosted by BMW's simple, almost minimal, fascia with big, clear dials and most functions controlled through a large screen on top of the fascia via the iDrive controller between the front seats – it's an excellent, intuitive system that soon becomes second nature to use.

And I love the 'boys' toys' – sorry, I mean functional driver safety aids – which are too many to mention but the surround view cameras, ideal for parking, and head-up display, so essential driver information appears to float at the end of the bonnet, are worth checking out. Many of them are optional but if you can afford this sort of car there's plenty of scope to tailor it to your needs and desires.

However you look at it, BMW's X5 is huge whether it is presence, image, status, appeal or tickingso many boxes as premium transport.