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Since we are providing advice based on our personal preference, I will recommend that you look for a 6-cyl -- either a 325, 328, or a even a 323 instead of a 318.
At this point, the price difference won't be significant, but the you will more easily find parts to modify the 6-cyl models, as well as DIY advice. I constantly get 20/30 city/highway mpg from my 1996 328i, and that could improve if I were to drive more conservatively.
Unless for very special cases (engine
), parts for the 318 will not be cheaper. They will cost just about the same. You will still be dealing with BMW parts.
I invite you to do a little more research before you make this decision.
What would be your plans for this BM? Daily-driver, track car? Daily-driven, slightly modified? Heavili modified?
If you think you'll ever want to go fast, stay away from the 318. The only viable option to make it go faster is to supercharge the engine, and that is expensive compared to just starting with a 325 or 328.