BMW Australia hopes the arrival of its new award-winning N20 turbo-charged four-cylinder engine in its Z4 will reverse this year’s 53.8 per cent slump in sales of its sports car.

Available in 135kW and 180kW states of tune, the engine helps to reduce the cost of entry to the Z4 range by $9300 – partly because its fuel efficiency qualifies for a $5500 saving in luxury car tax (LCT) – meaning it now undercuts the faster-selling Mercedes-Benz SLK 200 by $6000.

The folding hard-top Z4 has averaged 21 sales a month since its was launched Down Under in May 2009, whereas the SLK has enjoyed a monthly average of 35 units, increasing to 60 cars a month since the redesigned model was launched here in August.

BMW Group Australia will not speculate on volume for the two new variants but the company's product communications manager Lucy McLellan hinted that it now expected Z4 sales to return to 2010 levels, when it averaged more than 22 sales per month.

“Last year was a strong year for Z4,” said Ms McLellan. “We would expect the new four-cylinder engine in both outputs to see a healthy boost in demand, particularly with the new entry model at an especially attractive price point.”

Until the 2.0-litre N20-powered Z4 arrived in showrooms last month, sales of the model were biased towards the high-performance turbo six-cylinder variants, the sDrive35i and sDrive35is, rather than the outgoing naturally-aspirated sDrive23i and sDrive30i powered by the brand's iconic, high-revving N52 six-cylinder.

But BMW now believes long-term volume will come from the $76,900 sDrive20i base variant – its low-blow engine producing 135kW and 270Nm – with initial sales focused on the more powerful (180kW/350Nm) but equally efficient (6.8L/100km and 159g/km of CO2) sDrive28i, which opens at $89,400.

Both variants drive the rear wheels through a six-speed manual transmission as standard, with an eight-speed ZF automatic with paddle-shifters for $3500 extra. BMW says only 10 per cent of Australian Z4 buyers go for the manual, but that this is a relatively high proportion compared with other models.

BMW Group Australia product and pricing manager for the Z4 Alan Swanson told GoAuto the N20 engine gave the company a technical advantage and made the Z4 far more competitive against its rival from Benz, especially as its low fuel consumption enables a saving of around $5500 in LCT.

“We took advantage of (the LCT saving) to offer a similar spec and customer value (as the SLK),” he said. “We negotiated a better price too, which also benefited the six-cylinder variants that were repositioned at the time we announced the four-cylinder (in September).”

The N20 heralds the end of atmospheric engines in the Munich-based brand's compact sports car line-up, giving the 28i performance to rival Benz's $118,900 SLK350, which can hit 100km/h in 5.6 seconds, while returning marginally better fuel consumption than the 6.9L/100km achieved by the $82,900 entry-level SLK200.

In 180kW 28i tune, N20 is down 10kW on power compared with the old 30i six-pot but provides drivers with a slightly quicker sprint to 100km/h (5.7 seconds vs. 5.8 seconds) thanks to a 15kg weight saving plus an extra 40Nm of forced-induction torque (now 350Nm).

The $76,900 sDrive20i packs 135kW (15kW down over the old 150kW unit), but torque is up 20Nm, to 270Nm. Acceleration from zero to100km/h takes 6.9 seconds in the manual, three tenths slower than the outgoing 23i, while the sprint takes 7.2 seconds for the eight-speed automatic.

Additional to a 21 per cent improvement in fuel economy, peak power on both versions is achieved at 5000rpm, while peak torque is available from just 1250rpm, making them far more tractable than their peaky naturally-aspirated six-cylinder predecessors.

As well as efficiency-enhancing electro-hydraulic power steering and regenerative braking common to all Z4 variants, the N20-powered pair also features idle-stop for both manual and automatic transmission options.

Safety features consistent across the Z4 range include front and side airbags, anti-lock brakes with braking assistant, cornering brake control, rollover protection system, electronic stability control, traction control, an electronic-locking differential, seatbelt pre-tensioners and load-limiters.

Standard equipment on the 20i includes 17-inch star-spoke alloy wheels with run-flat tyres and tyre defect indicator, front and rear parking sensors, bi-Xenon headlights with washer jets and automatic range control, brushed aluminium interior trim, sun-reflective leather upholstery and heated seats.

Convenience features include electrically-adjusted and heated door mirrors, cruise control with braking function an auto-dimming interior mirror and rain-sensing wipers, while audio equipment includes a six-speaker CD/radio with MP3 compatibility, auxiliary and USB inputs plus Bluetooth streaming.

Although the more powerful 28i is $12,500 more expensive than the 20i, it is arguably the value champion for it also adds desirable extra equipment that would cost $10,600 if added to the base variant as options, meaning the increase in performance costs just $1900 extra in real terms.

Mr Swanson said there were few technical differences between the high and low-output N20 engines, the extra 45kW and 80Nm liberated by the 28i largely due to revised management software.

Buyers of the 28i get satellite-navigation with 8.8-inch screen, 3D display and 12-gigabyte hard-drive for storing maps and music, an 11-speaker sound-system, voice control, electric seat adjustment and an interior ambient lighting package, while the car is externally identified by its turbine-style 17-inch alloy wheels.

As with the rest of the Z4 line-up, both four-cylinder models get BMW's Dynamic Driving Control, which offers Comfort, Sport and Sport+ modes, the latter two sharpening throttle and steering response and Sport+ backing off the electronic safety intervention to allow drivers to explore the car's limits without completely disabling the safety net.

If fitted with the automatic transmission, Sport and Sport+ modes enable quicker and more aggressive gear changes, while allowing the engine to remain in gear for longer under hard acceleration.

Mr Swanson said the N20 engine delivered the old-school BMW message of ultimate driving machine, but using modern technology, and that the addition of an eight-speed automatic transmission would demonstrate to customers that the days of sluggish automatics are over.

He added that BMW may have taken longer to arrive at a downsized four-cylinder engine compared with rivals but that the company wanted to “do it right and make sure it feels like a BMW engine should”.

As GoAuto has reported, the N20 engine first arrived in Australia early last month under the bonnet of a new entry-level X3 SUV priced below $60,000 and will be used in the 5 Series and all-new 3 Series from February next year.

Mr Swanson said an N20-powered 1 Series was also on the cards, but that the X1 SUV – which was the first BMW to receive the engine internationally – would run for a while longer with the old six-cylinder unit due to high global demand for N20-powered vehicles.

Although Mercedes-Benz has launched a punchy diesel-powered SLK in Europe, Mr Swanson regarded such a move by BMW as highly unlikely, saying the brand would stick to a four-variant limit for its roadster.