Drive Car Of The Year

Best Small Luxury SUV 2023

Best Small Luxury SUV

With several competing brands jostling for your attention, the margin for error in small luxury SUV execution is slim. The Drive team has assessed the best of the bunch at 2023 Drive Car of the Year, so read on to find out more.

Small luxury SUVs are often the first step buyers take towards the luxury car segment, and as such they must put a prestige manufacturer’s best foot forward to potentially capture a buyer’s allegiance for life.

While not shopping on outright value, buyers of small luxury SUVs expect a host of technology, premium materials inside the cabin, powerful and efficient engines, as well as a feature-set and spacious cabin. It’s a lot to ask of a car, let alone one of the most affordable options in luxury car dealerships.

There are quality offerings wherever you look. Buyers typically look towards Germans like the Audi Q3 and Mercedes-Benz GLA, but with no major update to those models in 2022, the Drive team had to search further to find fresh rivals to the reigning champion, the Volvo XC40.

One brand that garnered much attention in Australia in 2022 is Spanish brand Cupra and its range of sporty, yet premium, small cars. These performed well during week-long reviews and in comparisons, earning the Cupra Ateca and Cupra Formentor places as finalists in the 2023 Drive Car of the Year Best Small Luxury SUV category.

It should be noted, while the cars on test were the hot VZx flagship specifications, this judging category focuses on the entire range, analysing each model line’s pricing schemes in addition to how the physical cars perform on test.

The Cupra duo are joined by the new BMW X1 that impressed us when we tested it.

As for the incumbent, the Volvo XC40 automatically gets an invite back to defend its title. The Volvo received a mild facelift in 2022 that included updated styling, new infotainment software, and new nomenclature for its range variants.

When charging premium prices, not only does a luxury car need to be a premium product, the overarching ownership experience needs to match. All four finalists sound like intriguing buys, so let’s delve into how the competition played out.

Winner: Volvo XC40


Volvo XC40

Volvo XC40

5 variants available

$ 53,490 - $ 81,490* MRLP

What we love

  • -Excellent roadholding and ride control
  • -Impressive value for money
  • -Strong and smooth powertrain

What we don't

  • -Interior doesn't wow you
  • -Second row lacks space
  • -Thirsty turbocharged powertrain 

The best car in its segment just keeps getting better. Volvo has won the Drive Car of the Year Best Small Luxury SUV award for the third year running. 

Though they may be small, running updates to the Volvo XC40 impressed judges with its revised styling, simplistic infotainment system, and subtle year-on-year tweaks that combine to make an already great vehicle even better.

Above all, the Volvo XC40’s value equation stood out. Consider the fact the 2023 Volvo XC40 range kicks off from just over $50,000, then look at the powerful engine under the bonnet, feature inclusions, and premium materials – it’s a wonder how Volvo is able to offer so much for so little.

During testing, judges were wowed by the XC40’s drive character that provided ample power for varying situations, as well as a suitably premium and plush ride quality. The transmission is slick and responds well to changing speeds. Plus, it works well with the engine to make the XC40 relatively frugal on fuel.  

The praise didn’t end with how well it drove, though. The Drive team continues to be enamoured with the Volvo XC40’s minimalist interior presentation that focuses on high-quality materials and impeccable build quality. The second row might not offer the ultimate in terms of available space – which we’d like to see improved for the car’s next generation – but the boot is capacious for its size class, which will swell to absorb a small family’s stuff.

A true benchmark of compact luxury, the Volvo XC40 continues to offer an unrivalled quality experience for SUV buyers.

Runner-up: BMW X1




4 variants available

$ 60,400 - $ 73,400* MRLP

What we love

  • -Impressive cabin presentation
  • -Second-row comfort
  • -Brilliant handling

What we don't

  • -Confusing infotainment user experience
  • -Base-variant engine lacks power
  • -Ridiculous options pricing scheme

BMW’s X1 has long been a solid choice in the small luxury SUV segment, and this latest iteration is no exception. Coming from its tired predecessor with outdated design and a lack of tech, the new X1 is a breath of fresh air that brings high-end interior appointments typically seen in BMW’s flagship sedans to the affordable end of the market.

Most impressive is the BMW X1’s new technology suite that incorporates a curved display across the dash. It runs the latest in BMW’s iDrive 8 infotainment software, which was notably used first in the iX flagship electric vehicle and 7 Series full-size sedan.

The new X1 makes great strides in space and practicality thanks to smart design tricks. Gone is a bulky transmission tunnel, which has been replaced with a large storage tray and floating centre console. The cabin is upholstered with fine, eye-catching materials and the second row contains a very comfortable amount of space. The second row handily slides and reclines for added configurability.

On the negatives, BMW has undercooked the powertrain of its entry-level X1 variant, the sDrive 18i. The engine feels a little lacking in this application. Also at odds with a premium-feeling experience is BMW’s decision to offer subscription-only access to some of the cars inbuilt features.

Finalist: Cupra Ateca




1 variant available

$ 61,750* MRLP

What we love

  • -Extremely spacious for a small SUV
  • -Sharp driving experience
  • -Well-equipped for the price

What we don't

  • -Infotainment is fiddly and laggy
  • -Thirsty around town
  • -Cabin feels a generation old and borrows from VW

Much like its crossover-style Formentor twin, the Cupra Ateca was a surprise wildcard at 2023 Drive Car of the Year Best Small Luxury SUV testing. Whereas the Formentor adopts a sleek coupe-style look, the Ateca remains with a traditional SUV shape that judges found to be wholly spacious and functional.

The Cupra Ateca’s powertrain is as generous and entertaining as the Formentor’s, and judges were more than impressed with how composed the high-riding shape is on the road.

But where the Cupra Formentor tries harder in its premium execution, there are some fairly obvious links back to Volkswagen on display inside the Cupra Ateca. These include the dash display and switchgear, which looks lifted from the Volkswagen T-Roc. Second-row space is commendable, but the materials and amenities on offer are fairly spartan.

The Cupra Ateca's price and size make it a small luxury SUV, and while the driving experience certainly delivers, the rest of the vehicle is not on par with rivals.

Finalist: Cupra Formentor


undefined variant available


What we love

  • -Keen drivers will enjoy the sharp handling
  • -Neat storage nooks and crannies
  • -Cool design touches

What we don't

  • -Closed-in-feeling cabin
  • -Ride jitters over small road imperfections
  • -Tyre noise

With a series of design touches more akin to Lamborghini than parent-brand Volkswagen, the Cupra Formentor is a stylish offering and one to be reckoned with. While judges were impressed by the Formentor’s fresh-feeling dash array and its slick embedded tech, they ultimately found the Cupra Formentor underdone for this level of competition.

To the Cupra Formentor’s credit it’s a suave option for small SUV buyers chasing a sporty bent, and this shouty presentation is backed up by a riotous powertrain. It was one of the fastest vehicles invited to 2023 Drive Car of the Year overall, and judges certainly enjoyed the small SUV’s agility on the road course.

However, the Cupra Formentor is not all about speed. It’s able to settle down to a comfortable clip for the everyday commute and provide a supple ride quality.

While the cabin is spacious enough in comparison to its small luxury SUV rivals, the interior lacked the polish exuded by its traditional rivals.

You can read about all the other 2023 Drive Car of the Year categories and winners here:
Drive Car of the Year categories and winners

Other Award Categories

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