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After buying my X3 last year I for various reasons (company car) ended up with an X1 as the family's second car/commuter car this year.
So for space and a more luxury feel, go for the X3. For agility and more connected feel when driving (the X3 isn't bad at all here) the X1 is better. But in fact I have found that space in the X1 is actually enough in most circumstances depending on your cargo.
Space in the backseat is obviously much better in the X3 but in my experience a couple of adults are just fine in the back of the X1 and the kids are indifferent.
Another aspect I would consider is the fact that the X3 is built on newer technology and you can clearly see that when you compare eg the instrument clusters of the two.
Anyway, it boils down to budget and preferences. Both cars drive much better than most comparable cars out there and surprisingly enough I have found space in the X1 to be enough at several occasions when I thought I needed the X3 to move stuff.
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