For years BMW prided itself on producing the ultimate driving machines in virtually every prestige sector — except one. It never had a model to compete with the hot hatches from VW, Ford, Vauxhall and Renault.

That changed in September 1994 with the introduction of the 3-series Compact. With a broad range of engines, rear-wheel drive and a prestige badge it seemed an attractive package. But despite the hype the Compact never fulfilled its potential. In fact with elderly underpinnings, dubious styling and a relatively high price tag the Compact was something of a disappointment.

BMW refused to give up, however, and in August 2001 introduced an all-new Compact. Based on the newer E46 3-series it was larger, prettier and nicer to drive than its predecessor, and with the introduction of more powerful engines could now be considered a true prestige hot hatch.

Top of the pile was the 2.5 litre straight six. Producing 192bhp its performance was superb: 0-60mph in a shade over 7sec and a top speed of nearly 150mph. The entry-level 316i also received a boost and came with a 115bhp 1.8 litre engine while the 318ti gained an increase of 3bhp to 143bhp.

But biggest news of all was the introduction of a 2 litre diesel unit, which blew away the 90bhp of the old 318tds with an impressive 150bhp. Not only does it feel quick, it is also frugal, combining a 0-60mph time of 8.9sec with an average fuel consumption that can top 50mpg.

The newer Compact also had better suspension, more interior space and a better interior finish. Rear-seat passengers will find access no problem, thanks to the clever sliding and tipping front seats, and once in place legroom is easily as good as the competition’s. Only the rather miserly boot space betrays the 8in reduction in length compared with the 3-series saloon.

Since 2001 all Compact models have had electric windows, leather steering wheel, traction control and alarm. Pay around £500 more for a used SE model and alloys and air-conditioning become welcome additions.

As with any prestige car you need to be fussy when buying a second-hand BMW Compact — options, service history and condition can dramatically affect value. The variable servicing interval can make checking a car’s history tricky, particularly if it has low mileage as the service visits can appear relatively infrequent. In these cases it is worth asking to see the original invoices and even contacting the servicing dealer. Cars with a host of expensive factory-fitted options may also look like an attractive purchase but don’t be tempted into paying a massive premium: the money the first owner spent on them is their loss and your gain. And be fussy about colour, trim and wheel combinations. Classic blues, blacks, greys and silvers are easy to resell, but those with red or green interiors are more niche.

The BMW Compact came of age when the new model was introduced in 2001, but its time as king of the hill was brief. It was killed off in 2003 in anticipation of the new 1-series. And while it may never have the following of some of its competitors, there is no doubt that as a second-hand buy it has many strengths.

Boot
The 300-litre boot is significantly smaller than the 440-litre one found on the 3-series saloon

Servicing
Variable servicing interval is dependent on driving style but varies between 8,000 and 10,000 miles

Wheels
Alloys are almost essential but check inside rim of 17in alloys, which damage easily

Engine
Check diesel engines carefully as they require regular oil changes to ensure longevity of the turbocharger

Warranty
Since November 2001 all new BMWs have come with a three-year unlimited mileage warranty, provided they have been serviced in line with the manufacturer’s requirements

Satellite navigation
A desirable option but do not pay more than £300 extra for a used car fitted with the system

Security
All models come with deadlocks and an immobiliser as standard

Safety
BMW never submitted the car for a Euro NCAP test but eight airbags together with traction and stability control should reassure buyers

Air-conditioning
Standard on SE and Sport models only

VITAL STATISTICS

Model BMW 320td SE Compact
Engine 1995cc, turbodiesel intercooler
Power 150bhp
Transmission Five-speed manual
Fuel 51.4mpg (combined cycle)
Acceleration 0-60mph: 8.9sec
Top speed 133mph

THE ONE TO BUY

BMW 320td SE Compact 2002 52 with 30,000 miles. Pay £10,895 at a BMW dealer, £9,995 privately
53 with 30,000 miles. Pay £24,250 at a Volvo dealer or £22,995 privately

OR, FOR THE SAME MONEY

2003 03 Volkswagen Golf GT TDI
2005 05 Alfa Romeo 147 JTD Lusso
2003 52 Audi A3 TDi 130 Sport
2001 51 Merced C220 CDI Sport
2003 03 Volvo C70 2.3 T5 Coupé

VALUES



Source: estimates based on confidential CAP black book prices. ‘Trade’ is what a dealer would pay to buy your car; ‘Retail’ is what you would pay a dealer