Unlike the previous model (E36 series), the BMW Compact E46 series, introduced in 2001, had the same dashboard and rear suspension system as the hatchback. Branded M54, the 325ti version benefited from the excellent 2.5-liter in-line 6-cylinder engine that guaranteed 192 horsepower, compensating for an increase of 130 kg compared to the 323ti model of the E36. In February 2003 there was a slight restyling (lower body, tailgate, rear lights), which coincided with the introduction of a 6-speed transmission and a new Pack Sport configuration with aerodynamic kit, "M" steering wheel and so on. . Production stopped in December 2004.