While the 335d is the embodiment of the Ultimate Driving Machine, the X5 xDrive35d, which competes with the Audi Q7 TDI, Mercedes-Benz GL320 BlueTech, and the Volkswagen Touareg, is the performance leader in this crowd.

The diesel model is virtually indistinguishable in appearance from the 3.0-liter petrol model – until you lift the hood. Peer inside and you’ll see an all-aluminum, twin-turbo, 3.0-liter oil-burning I-6 that uses Bosch common-rail direct fuel injection (feeding fuel at up to 26,000 psi) with a compression ratio of 16.5:1. This provides the X5 xDrive35d owner with the performance of a V-8 with the fuel economy of a four-cylinder.

Where this X5 does distinguish itself is performance. While 265 horsepower at 4200 rpm doesn’t sound particularly impressive, with diesel engines, it’s really a question of the torque, in this case a massive 425 pound-feet of it.

With the help of the ZF-manufactured six-speed automatic gearbox and BMW’s xDrive all-wheel drive system, the driver might quickly forget he’s in an SAV. Unlike traditional trucks and SUVs, we found the X5’s handling to be exceptionally sure footed. It benefits from the BMW xDrive all-wheel drive system, which constantly adapts to changing road conditions, as well as multiple electronic systems including Electronic Damping Control (which controls body roll) and dynamic stability control (DSC), which can enhance handling if it senses understeer (front wheels receive no torque) or oversteer (front wheels receive maximum torque).

We took the X5 xDrive35d on a variety of trips, from local errands to long drives along scenic and windy parkways. The view from the driver’s seat was impressive. We found it true to BMW’s Freude am Fahren (the Joy of Driving) slogan whether on city streets or the open road. This was one large vehicle but it was eminently floggable nonetheless.

Inside the cabin, the diesel engine’s pleasant clamor was noticeable at low speed (unlike in other diesel-powered cars in its class) but it was virtually inaudible at speed. The interior has capacious amounts of space for its passengers, as befitting a car of this size. Thanks to the electric shifter and parking brake control, there’s an impressive amount of storage in the center console as well as a very large glove compartment.

Besides performance, in diesel guise the X5 has a significant price advantage over its petrol-powered V-8 stablemate. The diesel X5 starts at $52,175 (the V-8 starts at $57,175) and is eligible for BMW’s $4500 Eco Credit, making the actual cost a very attractive $47,675. On top of that the buyer is entitled to an $1800 tax credit and the knowledge that the diesel X5 can travel close to 600 miles on a tank of fuel, about 30% farther than the V-8.

(In fairness, it must be mentioned that the petrol-powered twin turbo X5 xDrive30i gets 21 mpg and sells for $48,475, only $800 more than the cost of the diesel X5.)

The X5 xDrive35d was introduced as a 2009 model; the current X5 body was introduced in 2007, replacing the original X5 that launched in 1999. All X5s are manufactured in Spartanburg, South Carolina. 30% of the X5s sold in December 2009 and 25% of the X5s sold in November 2009 were diesel models.

BMW's Advanced Diesel Engine

Six editors from Ward’s nominated a total of 34 engines available in regular production cars in the United States priced no more than $54,000.

The two diesel winners were BMW, for its 3.0-liter six-cylinder twin-turbocharged and direct-injected Advanced Diesel engine powering the 335d sedan, and Volkswagen, for its 2.0-liter four-cylinder turbodiesel engine powering the Jetta SportWagen TDI.

The BMW 335d is the fastest diesel-powered passenger car sold in the U.S., capable of zero-to-sixty in under six seconds.  It is also the most fuel efficient car BMW has ever sold in the U.S., capable of achieving 36 mpg (6.5 l/100 km) on the highway.  The Volkswagen Jetta SportWagen TDI gets 40 mpg (5.8 l/100 km).

Engines employing hybrid-electric technology from Ford and Toyota were also named winners, as were engines from Audi, Chevrolet, General Motors, Hyundai, and Subaru.

The awards will be given during the North American International Auto Show next month in Detroit.