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The M340 is very nice for what it is, but it is nowhere near M car territory and like others have said, BMW has no intentions of it being so.
M cars are about more than just 0-60, it's about the driving experience and how the car just feels "special". It's hard to explain really, but the M340 just doesn't have that "it" factor, so I won't even attempt to compare it to any M car past or present.
And just to clarify, I have test driven the M340 and thought it was great and would definitely pick it over an S4 or C43. But I would never consider it over an F8x or even a lightly used E9x.
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