The BMW 3 Series Compact is a car which was produced from 1994 through 2004 by BMW. It is a 3-door hatchback version of the BMW 3 Series through two generations, for the E36 platform in 1993 and E46 platform in 2001. Unlike most hatchback competitors which were transverse engine front-wheel drive, the 3 Series Compact uses the longitudinal engine rear-wheel drive layout.
In 2004, the 3 Series Compact was replaced by the 1 Series which encompassed 3-door and 5-door hatchback, coupé and convertible body styles (the coupé and convertible models have been marketed separately as the 2 Series since 2014) as BMW's entry-level cars; a new nameplate was created since the 1 Series is smaller than the contemporary 3 Series despite sharing mechanical components. The 3 Series GT, introduced in 2013, is not a successor to the 3 Series Compact, despite also using a hatchback rear opening.
First generation (E36; 1994).
Launched in March 1994, the E36 3 Series Compact (model code E36/5), was BMW's first hatchback since the 2002 Touring model was discontinued in 1974. It reportedly cost BMW $500 million USD to develop the hatchback from the E36 platform.
From the front bumper to the A-pillar, the E36/5 is identical to the E36 saloon. From the A-pillar back, the E36/5 is unique. Although the overall length of the E36/5 is approximately shorter than the rest of the E36 3 Series range, the length of the wheelbase is the same. The doors with framed windows are unique to the E36/5, rather than adopting those of the E36 saloon/wagon or the frameless ones of the E36 coupé.
The interior is mostly similar to the E36 saloon models, apart from the folding rear seats and dashboard which share some elements with the previous generation E30 3 Series. Some cost-cutting was employed in the E36/5 dashboard such as manual air conditioning, compared to the rest of the E36 lineup which had automatic climate control. 
The E36/5 front suspension uses the E36's MacPherson strut design, while the rear suspension uses a semi-trailing arm from the previous generation E30 models instead of the Z-Axle multi-link suspension used by the rest of the E36 range. The E36/5's rear suspension arrangement - which was also used on the Z3 - was more compact and cheaper to produce. Some reviewers believed that this arrangement caused the E36/5's to be prone to oversteer.
The launch models were powered by four-cylinder petrol engines, with the range expanded over the years to include a four-cylinder compressed natural gas engine, four-cylinder diesel engines, and six-cylinder petrol engines. In North America, the sole model available was the 318ti, initially powered by a DOHC 1.8 litre, inline-four BMW M42 engine. In 1996, in conjunction with making the car compliant with OBD-II, the M42 was replaced by the 1.9-litre M44 engine.
A large sunroof, covered by a folding canvas roof was available from mid-1995. This model was known as either the "California Top Edition" or the "Open Air Edition".
In September 1996 (for model year 1997), the 3 Series Compact received a facelift in line with the remainder of the E36 range. Changes included revised tail-lights, grille, bumpers and mirrors.
Models.
M3 Compact prototype.
In 1996, to celebrate the 50th birthday of the German automobile magazine "Auto, Motor und Sport", BMW M hand-built one M3 Compact. The car embodied all the technical and optical characteristics of the standard E36 M3, but in the compact body. Quad exhaust tips, Recaro sports seats, four-point seatbelts, an Alcantara steering wheel and gear lever were specific for this model.
Reception and sales figures.
The E36 Compact received a positive reception, as it retained the ride/handling compromise of the saloon and coupe, with the Compact being more responsive (due to lighter weight) and more prone to oversteer (due to its different suspension), while also having a practical cargo hold. The pricing was also attractive, as the North American base price of the Compact (318ti) was $20,370 USD which undercut the next-cheapest BMW 3 Series (the 318i saloon) by $5070 USD. 
The E36 Compact was popular in its home market in Europe, which prompted rival Mercedes-Benz to include a hatchback style for its C-Class lineup, known as the . Based on the success of the Saab 900 and Acura Integra, BMW imported the E36 Compact for North America in late 1994 (for the 1995 model year) but ceased in 1999 after a comparatively short four-year run due to a combination of poor sales, and BMW's decision to phase out all four-cylinder vehicles in the United States. The failure of the E36 Compact precluded the E46 Compact's entry into the North American market, and prompted BMW to reconfigure the BMW Compact's successor, the BMW 1 Series, from a liftback to a coupe before attempting to market the car in North America again. Similarly, the C-Class SportCoupé had a short sales run in North America and was withdrawn from that market while the saloon/wagon remained available.
The total production for 1993 to 1999 (ie excluding 2000, the final year of production) is 371,498.
Second generation (E46/5; 2001).
The 3 Series Compact was redesigned using the then-new E46 platform. This updated Compact has the model code E46/5. It was first presented at the 2001 Geneva Motor Show, and went on sale in European markets in June 2001.
As per the rest of the E46 range, the wheelbase was increased by . The overall length is also increased by .
The exterior styling has several differences to the rest of the E46 3 Series range, notably the distinctive headlights and tail-lights. There is a unique set of doors with framed windows for the E46/5, rather than adopting those of the E46 saloon/wagon or the frameless ones of the E46 coupé. Mechanically, the Compact shares many elements with the rest of the E46 range, however the steering rack has a faster ratio. ;ref name="www.rac.co.uk E46/5" ; ;/ref ;
The E46/5 was not sold in North America as its predecessor didn't prove to be a sales success in that market. The E46/5 was not as successful as the E36/5, even though BMW had fixed many of the E36/5's shortcomings (limited range of engines, rear-seating room). While lauded as a driver's car, the E46/5 received some criticism for its unique headlights and tail-lights which were considered unattractive compared to the rest of the E46 lineup.
Transmissions.
Transmission options are mostly the same as the equivalent E46 coupe/sedan model.
From early 2003, the 325ti was available with a 6-speed SMG-II automated manual transmission.
Models.
Petrol engines.
† Used instead of the N46 engine in countries where vehicles tax charges favour smaller engines.
References.
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