From a 21st Century perspective, BMW's 3 Series is about as slam-dunk-wonderful a car as there is available. It's got a well-deserved reputation for packing outstanding driving dynamics, excellent quality and undeniable prestige into handsome sheetmetal - it's the standard against which all other small sedans are, and must be, measured. Back in the 20th Century however, when the 3 Series first appeared, it wasn't a sure thing at all.
In the mid '70s, BMW faced the task of replacing its now-aged 2002 coupe. But BMW also knew that the 2002 embodied the company's spirit. And the 2002's replacement would need to keep that intact.
BMW picked a ripe moment in history to introduce the 3 Series. The world was just coming off the shock of the oil embargo as the first one rolled off the Milbertshofen assembly line May 2, 1975, and people who would have never considered a smaller car before suddenly found the idea of an exquisite but relatively frugal machine irresistible. In 1974, BMW sold 184,330 cars, but bolstered by the European introduction of the 3 Series in 1975, worldwide sales reached 221,298. The 3 Series hit North America as a 1977 model and that pushed BMW production over 290,000 that year and beyond 320,000 in 1978.
Internally designated E21, the 320i was marginally larger than the outgoing 2002 (at 100.9 inches, the 3's wheelbase was 2.5 inches longer and the car's 177.5 inch overall length was 1.5 inches longer) and used that extra size to produce a more stable car with better ventilation and a more easygoing manner. As a direct successor to the 2002, it was still available only as a two-door and carried over most of the styling themes established by that car; the forward-leaning grille, clipped rear side windows and low waistline.
Under the skin, the car was an evolutionary step up from the 2002. Basic elements like the McPherson strut front and trailing arm rear suspension, and front disc/rear drum power braking system differed in detail and specification, but were similar in overall design. For power, the car had a 2.0-liter Bosch K-Jetronic fuel-injected inline four rated at 110 horsepower; it met emissions regulations without a catalytic converter. The standard manual transmission remained a Getrag four-speed unit, while a ZF three-speed automatic was optional.
The evolution of the American-market E21 320i was incremental. In 1980, the engine shrunk to 1.8 liters (though the name remained 320i) and BMW added a three-way catalyst to the emission control system. Though it now produced just 100 horsepower, the 1.8's performance deficit was ameliorated somewhat by the adoption of a five-speed manual transmission. This change did not, however put much of a crimp in America's enthusiasm for the car, as sales continued to climb, spurred by BMW's increasing reputation and the second oil embargo in 1979. As the last few E21s dribbled out of dealer showrooms in 1983, BMW had firmly established its 3, 5 and 7 Series sedan product mix and was ready to move all of its products solidly upmarket throughout the rest of the decade.