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Within hours of naming the Audi Q5 the fifth-best looking current Audi, BMW sends out pictures of the X1 Concept, making their smallest “sport-activity vehicle” the worst-looking BMW. The battle with the X6 for that position is fierce, however. 
Moving on, the Q5 won’t likely be perceived as a direct competitor for the BMW X1. Isn’t that the X3’s job? Then again, the X1 will certainly be plentifully-powered, as BMW’s tend to be, and is only 4.3 inches shorter than the X3 from bumper-to-bumper. If the X3 is the direct competitor for the upcoming Audi Q5 and Mercedes-Benz GLK, and thus; the Infiniti EX35; Acura RDX; Land Rover LR2 and Volvo XC60, with which vehicles will the BMW X1 compete?
The $39,000 X3 leaves plenty of room beneath. A well-equipped and thoroughly-accessorized Subaru Forester 2.5XT Limited easily tops $34,000. Likewise, consumers who like their Volkswagen Tiguan SEL up-optioned also spend over $35,000 easily. Spend a few minutes with options on a Toyota RAV4 and $34,168 comes up quickly. 
The point of all this? Luxury badges are one thing; luxurious vehicles another. Premium brands move downward as mainstream brands swing upward. Everybody wants what everybody else already has. BMW will put the X1 into production and market it in a segment that’s difficult to define. Nevertheless, competitors already exist. Most people just don’t know it.