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Well BMW has an interesting problem. If they do build the M1 with the old M3 engine they basically have a repackage e46 M3. It will have +33 hp, LSD and perhaps some weight saving compare to the 135i.
I am not sure how big of an audience that will create. Pretty sure there are people out there who would want one for M badge, but it's the same car as e46 m3. I will just buy a E46 M3 and I don't have to wait. E46M3 is a great car but I am not sure if I want to spend 10k more to get a repackaged one that came out 5-6 years ago. Why not just get a used for a lot less.
If they don't use the old engine they will have to engineer a brand new high reving 6cylinder engine whose only purpose is for the M1 since the Z4M will be getting the v8 and that engine has to have over 333hp.
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