You may not know it, but the BMW 320i has been by and large the most popular model in the 3 Series range. The previous generation 320i accounted for around 18,800 of the 34,324 BMW 3 Series sold in Australia overall.

Based on those numbers, BMW Australia has been hurting up until now with the lack of a new 320i in the new BMW 3 Series range. Nonetheless, the new BMW 320i is set to change all that and challenge the dominating position of the Mercedes-Benz C-Class.

Given the current C-Class is towards the end of its life cycle, the all-new BMW 320i has a distinct advantage over its German rival. Powered by the same 2.0-litre twin-scroll turbocharged petrol engine (N20) found in the 328i (albeit with a different turbo and compression ratio), the 320i is a significant improvement over the model it replaces.

135kW of power and 270Nm of torque (which is, unsurprisingly, the exact same figure as the Mercedes-Benz C200) move the 320i from 0-100km/h in 7.6 seconds, marginally faster than the C200 (8.2 seconds). Where it really shines, however, is the 6.0L/100km combined city/highway fuel economy figure, which is very commendable for a turbocharged four-cylinder petrol capable of great off-the-line and in-gear acceleration.

Like all the models in the BMW 3 Series range, the 320i enjoys a perfect 50:50 front:rear weight distribution. Add a five-link rear axle and double-joint front axle suspension setup with a 26 per cent stiffer body than the previous model 320i (which was already a sporty car) and all of a sudden you’ve got the best handling model in the medium luxury segment.

Around Suburbia the petrol engine coupled to the standard eight-speed automatic does a noticeably better job of delivering instantaneous power compared to the 318d and 320d. In gear acceleration from 40-60km/h will push you back into your seat and is more than you’re ever going to need around town. Merging on to a highway is also a breeze thanks to the well-spaced gear ratios (helped by the fact that you’ve got eight to pick from).

Put the 320i into Sport or Sport+ (which gives the stability control system the green light to let you burn some rubber before intervening) and it goes from being a comfortable “Efficient Dynamic” cruiser with auto-start stop and lazy throttle response, to a baby 335i. Steering feel is typical BMW: top notch. Sport mode provides a heavy and precise feel when you need it while it instantly becomes friction free when in comfort mode. It outdoes the C200 in this regard, given the Merc is generally on the softer side when it comes to steering.

The interior is also a vast improvement over the previous generation 3 Series. It’s no longer just a case of black and more black. It also feels and looks more sophisticated in its design and appearance. It’s fair to say the C class is no longer the king of interiors in this segment as the two are now definitely on par. Standard interior equipment includes electric seat adjustment with memory function, dual-zone climate control, sport leather steering wheel with paddles, Sensatec man-made leather upholstery and a 6.5” colour display iDrive driven screen in charge of six speakers.

The seats are supportive and comfortable but can be a little small if you measure on the large side. Our only real complaint about the interior package is the lack of Bluetooth audio streaming as standard equipment, even though telephone connectivity is available (you can read more about the BMW 3 series interior in our BMW 318d review). It would’ve been nice to see Satellite navigation as standard as well, given the screen is already there.

Apart from the new engine, the new BMW 320i is not noticeably better in any one specific way over its predecessor or its competitors. Nonetheless, if one was to add up all the improvements (however minor they may be) together, collectively it creates one seriously formidable luxury sedan. For a starting price of $57,600, it’s also a $1,000 less than the Mercedes-Benz C 200 and $2,300 cheaper than Audi’s equivalent Audi A4 TFSI.

It’s important to note that the N20 engine used in the 320i feels well and truly under-tuned. As in, it never sounds like it’s struggling to deliver its power. One may even argue that it’s artificially limited to a certain power and torque rating just to make room for the 328i, which uses the same engine (with a different turbo) but delivers 45kW more power and 110Nm more torque. In that regard the 320i is the perfect model in the 3-Series range. It offers class leading acceleration and fuel economy, a sporty dynamic drive and a great list of standard features. It’s no wonder it’s expected to accounts for more than 50 percent of 3 Series sales.

The BMW 3 Series has received a five-star safety rating from the Europeans and is expected to achieve the same results here in Australia. There are no options when it comes to safety and all variants include driver and front passenger airbags, head airbags in the front and rear, side airbags for driver and front passenger as well as dynamic stability control. If you’re a believer of getting what you pay for, you’ll also be pleased with BMW’s excellent build quality in the event of an accident.

If you’ve got about $60,000 to spend on a luxury medium saloon, there’s never been a better time to shop. The three Germans are all offering very good vehicles and given the highly competitive nature of the segment, a deal is ready for the making. But if you’re stuck deciding between a 318d, 320i or 320d, which are priced within $4,500 of each other, let’s make that choice clearer for you.

The BMW 320i is the perfect car if you’re not all that fussed on diesel but still keen on fuel efficiency, driving dynamics and an overall sporty sedan that is both comfortable and lively. The 318d is a reasonable choice if you absolutely must have a diesel but can’t afford to go for a 320d, which, in our opinion, offers the best package of the three.