The company aims to reach customers interested in a luxury car with utility features.
"Of course it will have to become a typical BMW vehicle and an individual car," Burkhard Goeschel, BMW design development boss, told Automobilwoche.
The plan is to design a 5-meter-long vehicle that offers a highly variable space concept.
"Just as with the BMW X5, we will enter the segment at the top," Goeschel said.
BMW expects a decision by 2004 on whether it will build the vehicle.