Luxury is where the profits are for car companies, but you've got to get butts in seats first if you hope to turn a profit on options packages and extended warranties. Cars like the 2013 BMW 320i xDrive serve as a form of feeder pipe into the premium ecosystem, an entry-level sedan whose reasonable base price works as the jump-off for a lifetime of BMW ownership (as well as the temptation of the options sheet). Few other luxury companies have been able to successfully plumb the depths of the entry-entry-level with similar compact sedan offerings - think of the relative failures of the Lexus IS 250 and the Infiniti G25 - which puts BMW in a unique position if it can overcome this low-end inertia and scoop up a fresh demographic of premium car shoppers.
There's always a risk of a brand being damaged when it releases a product that's not quite up to the expectations of its traditional buyer base. However, the premise of sticking a less powerful engine into an established model is a time-tested tactic that poses little risk to BMW's market equity. The 2013 BMW 320i xDrive is missing a few things that one would typically take for granted from the German automaker's ownership experience, but as we'll see below, that's both a strength and a weakness depending on your perspective.