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I'm with you, Brett. This is, first and foremost, a compact car. Luxury compact, yes. And potentially high performance, yes. Would an M version be iconic, yes.
But I think regular people are pretty straightforward on how they view compact cars (even luxury ones) and would need to be very motivated to spend US$40K on a car in this configuration.
I'm targetting the mid-range (130i), as I expect it will be a good balance between $$ and performance/features. I would expect the market to be split something like 30/65/5 were 128i/130i/M1 to be the lineup.
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