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I compared these cars back to back. In fact I was pretty close to pulling the trigger on an X3M Comp but ultimately ordered a M340i. You are spot on as far as reasoning; the low end torque is severely lacking on the X3M and it makes the M340 feel quicker around town. I also just couldn't get used to the feel of the higher driving position of the SUV.
Regarding the suspension, I liked the X3Ms stiff suspension at first, especially because it removes the wallowing feel that the X3 M40i has, but after a second and third test drive I did tire of it. Again, I think the M340i does a good job at compromising on that.
They are different cars for sure. If the G80 were available in AWD maybe I would have chosen that. But right now, between the two, I'm happy to have ordered the M340i. And believe me, I wanted the X3M real bad at one point.
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