Sniffy press reaction haunted the 3 Series Compact from the moment of its launch in late 1994. In a bid to cut complexity, BMW had ditched the clever multi-link rear suspension of the (then) current 3-Series saloon range in favour of the less advanced semi-trailing arm arrangement as used on the E30 series cars from the eighties and nineties. Whilst many thought this was cynical cost-cutting and evidence of an inferior product, the truth is that the original E30 BMW M3, renowned as the best M3 variant to date, used this setup and was none the worse for it. It even carried on in the M-Roadster and M-Coupe models, both cars which could hardly be accused of having prehistoric handling qualities.
The range consisted of a 1.6-litre 102bhp 316i and a 1.8-litre 140bhp 318ti. In September 1995 a diesel model was added to the range, the 1.7-litre 90bhp 318tds. April 1996 saw the 318ti fitted with a 1.9-litre 140bhp engine, and in September 1996 the range enjoyed a mild facelift, which included a revised grille, bumpers, mirrors and lights. Some minor changes were also made to the interior, including a lockable glovebox, lights in the footwells and an extended choice of upholstery types.
A 318ti Compact Sport was launched in February 1998, and in early 1999, the 316 Compacts received a detuned version of the 318ti's 1.9-litre engine, producing 105bhp. Summer 1999 heralded the launch of the 316 Compact Sport, and SE trim level for the 316, 318ti and 318tds.