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I have both and they are different beasts on their own. The M3 is a high performance car that you can drive on the road on a daily basis. The 135i is just a pocket rocket that will continue to impress you with the massive amounts of torque on demand.
As far as handling, the 135i can't compete with the M3. Every time that I drive on the back roads with the 135i I wish I was driving the M3. High speed handling is the same. You can drive the M3 at triple-digit speeds all day with no worries. The 135i becomes unstable at anything above 90 mph.
When it comes to brakes, again, the M3 has the edge (I do have European rotors and more aggressive pads on the M3). I've experienced several scary moments in the 135i during braking because I expected same or better performance than the M3.
I'm extremely LUCKY to have both in my garage and truly enjoy both of them.
The bottom line is to go and try to land a good extended test drive on both cars and you will notice the difference right away. They are both GREAT and vastly superior than most vehicles on the road today!
Good luck with your search!! You will not go wrong with either one!
PS - I used to be VW nut until I bought my first BMW...
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