You can definitely tow with the 3.0. I towed my ski boat with my '01. And while it wasn't a rocket it was still very capable. The OEM hitch is the way to go. I installed mine myself and also the Tekonsha Prodigy brake controller. The hitch is time consuming install, but if you are remotely handy with tools and using the instructions on this site, plus another pair of hands you can do it. Brake controller is a must as well. I have the 4.4i now and that thing just yanks the boat around easily. I am thrilled with the 4.4i and would recommend that engine for towing chores. But if you find a great 3.0i for a good price you will still have a good tow vehicle.

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2007 328i Sport, Monaco Blue
2011 X35D - sold -Space Grey
2004 X5 4.4i - sold - Kalahari Beige
2001 X5 3.0i - sold - Pearl Beige
2006 325i Sport, Sonora Beige
2000 323i - sold - Sienna Red