Outside air ingress is controlled by the recirculating button (either on, or automatic) and not by the dash temperature adjustment control.

x5mad is correct when he refers to it as having a mixing valve, but it is mixing heated or unheated air, or cooled and uncooled air, not inside and outside air.

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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