We like
Performance, handling, steering

Room for improvement
Tight rear seat, lack of equipment

COMING to terms with BMW nomenclature is not getting any easier.

Recollections have it that the problems started when the 2.5-litre 325i was replaced by the also 2.5-litre 323i during the 1990s - a phenomenon that was followed up when the 318i went from 1.8 to 1.9 litres in 1998 and then, more recently, to a full 2.0 litres. The same applies to the six-cylinder 320i, which went from 2.0 litres to 2.2 litres in 2000.

But if you thought BMW's policy was to at least give more engine than the model name suggested, unexpectedly we find the 745i is actually a 4.4-litre. Only two models, the 316i and the 330i, reflect reality with 1.6 and 3.0 litres of engine respectively.

You have to sympathise with BMW though. Such subterfuge allowed the company to at least keep the 318i a 318i, despite two jumps in engine capacity. And, at the top end of the range, 745i somehow has a nicer ring to it than 744i.

But if model-naming confusion remains an issue at BMW (admittedly very minor), the underlying truth is that any 318i buyer will be prepared to admit that 2.0 litres is normally a lot better than 1.8 litres.

Thus it becomes a fact that the latest version of the company's top-selling model has quietly transformed from being unquestionably underdone to being quite adequately endowed.

And there is more to it than merely raising engine capacity.

Prior to the 2.0-litre engine, the 318i's four-cylinder powerplant was a mere single camshaft eight-valver. Today's 318i has a brisk, efficient engine complete with twin camshafts and a full complement of 16 valves.

The kiloWatts may not be overly spectacular at 105, but the torque figure of 200Nm is very good for the capacity.

Almost as importantly as the engine, the 318i also now adopts BMW's latest five-speed automatic transmission. This is a smooth, intuitive gearbox that extracts the most from the engine and allows the driver to step in and take a degree of control if needed via a Steptronic shifter.

The only aberration is that the directions for down or upshifts are at odds with virtually every other system. In the BMW the lever moves forward for a downshift, rather than backwards in most other tipshift-style autos.

But if the 318i was treated with some disdain in the past as a hardly worthy bearer of the BMW badge, the latest version does it relative justice. It's no burner of rubber, but at least it is able to keep pace with the rest of the mid-$50,000 pack.

All this tends to put a different spin on the 318i. The car somehow seems more complete, a more balanced and driveworthy package. Where the 1.9-litre engine was a sometimes intrusive and slightly breathless element, the 2.0-litre seems to feel smoother and a lot more confident.

BMW says it will accelerate, in five-speed automatic form, to 100km/h in around 10.6 seconds, which is quite okay in this market grouping.

Suddenly, the 318i feels like a driver's car. It feels responsive in all the ways a BMW is supposed to feel.

Strangely though, although we all seem to think the latest E46 version is a relatively new model it is actually getting on a bit, having been around now for all of five years.

In the face of a fresh new 7 Series and upcoming 5 Series and Z4 roadsters, the 3 Series represents the old school of BMW styling. For some that may be a good thing, because the car still looks clean and sleek and does not challenge the eye with the unexpected creases and curves of styling chief Chris Bangle's controversial new look.

The 318i is merely a finely balanced, aspirational entry level prestige car.

Equipment levels these days is quite high with leather seats, an unbelievable multiplicity of airbags and electronic primary safety systems that include, from March, 2003, full-blown stability control to help correct incipient understeer of oversteer.

The 318i is not, of course, as sporty to drive as six-cylinder variants. It lacks the authoritative punch of the 170kW 330i. But, by consulting the options list, at least it can be made to look like something much more aggressive.

And, unlike some factory dress-ups, the 3 Series has the underlying panache to respond quite favourably to a set of big wheels and a tightened up suspension. Remove the badges, tread quietly at the traffic lights and no-one need ever know.

The 318i in base form steers nicely, with the sort of precision you'd expect but somehow did not seem to quite get before. It has a nice, tight, well-built feel about it that tends to separate it from most of its opposition.

Interior space is about what you'd expect of a car this size that is, it's plenty roomy up front but requires some jiggling to get back seat passengers comfortable if everybody aboard is of normal adult proportions.

That said, the seats are supportive and are still there doing their job at the end of a hard day's drive. And in the 318i Executive they are full leather and multi-adjustable, even if the controls are manual.

Buyers also get a decent sound system with six-disc CD stacker and climate control air-conditioning (with micro filer) as well as the usual power windows, cruise control and trip computer.

Alloy wheels are also part of the deal at Executive level, explaining the roughly $3500 price jump from the base 318i.

Of course the options list is massive and contains a lot of things you might have expected to be part of the basic deal. It allows you to add things like satellite navigation, power sunroof, park distance control, power adjustment and heating for the front seats.

Typically, metallic paint - and how many 3 Series do you see without it? - remains an extra-cost option.

All of which means that most 318is on the road are unlikely to have rolled out of the showroom at anything near sticker price. It's hard to imagine the average 318i Executive auto costing much less than $60,000, even before on-road costs are added.

But the 318i, always a contender at the top of the category, is a better car now than it was when the E46 series first rolled into local showrooms in 1998.