My first BMW was a 320xi. Had it a 18 months, sold it at a loss and got a 340xi.
Why? Not enough power.
Specifically:
1. When fully loaded with passengers and cargo, there was noticeable drop in acceleration esp. when getting up to speed on the on-ramp.
2. When making a fast over-taking maneuver on a 2-lane highway. The 320i just couldn't get up to speed fast enough and always made me nervous.
The cost difference between a 320 and 328/330 is negligible, but the power gain is substantial. Had I known then what I know now, if I would have originally spent $4k more and gotten a 328xi, I probably would have been satisfied and kept it.
Post-LCI 340i has beefier suspension components than the 320i; also the 340i has better brakes. So it's not really fair to say the 320 is just a 340 with a smaller engine. It's less capable all around.
What did I notice when driving the 340xi?
1. A heavier nose. The 320i is light and nimble, and very tossable.
2. Unrelenting waves of power. Fully loaded I can press everyone in the car into the seat getting on an on-ramp, and still have power in reserve.
3. Whereas I was always going to Wide Open Throttle all the time in the 320, I hardly ever go WOT in the 340. And when I do, it's for like, 2 seconds max. And then I'm in Go To Jail territory. So in that aspect, the 320 was more fun to drive. BMW rates the 340xi MPPSK 0-60 at 4.4 seconds, but it's faster than that. I've clocked it from 3.8 to 4.2.
4. The 340 has so much grunt that it's much more fun to drive overall. I can always shove the car forward with a slight stab of the accelerator.
5. The engine. The B58 is amazing. I have the MPPSK too, and the sound is just awesome. (Also have the M Performance brakes, Dinan springs + Koni Sport yellow dampers).
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