I agree that the "is" model wouldn't be targeted at a broad audience, but I think it would be lumped in with the standard E70 X5 in the eyes of many. The M5 is seen as a different car IMO, it isn't a 5 series with a V10. It is very low production. The fact that is gets 12 mpg is lost on the public, it isn't relevant. If the X5 had a similar hurdle to overcome (even worse, since it is heavier it could have worse mileage than the M5) then the news reports would talk about the 10 mpg BMW SUV, and it would carry the same stigma as the Hummer does, notwithstanding that most models would have the I6 or the diesel, and do much better on fuel economy.

The new engine for the 7 is a twin turbo V8, to be released in 2008 by some reports. That is the same engine that will make it to the X5is, after it comes out in the 7 series. BMW needs to not only improve mileage throughout the range, but it needs to be seen to be improving mileage.

All of the above is conjecture, but it is interesting to speculate none the less.

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2007 X3 3.0si, 6 MT, Premium, White

Retired:
2008 535i, 6 MT, M Sport, Premium, Space Grey
2003 X5 3.0 Steptronic, Premium, Titanium Silver
2002 325xi 5 MT, Steel Grey
2004 Z4 3.0 Premium, Sport, SMG, Maldives Blue