Used BMW 3 Compact series is a small family car, basically a BMW 3 Series truncated liftback. The production of the model was started in 1993. From 1994, it was based on the BMW E36 platform. It was replaced by e46/5 in 2001. And the last BMW Compact series car was produced in 2004. This series was replaced by the 1 Series.

BMW e36/5 was available in 316i, 316g (compressed natural gas), 318ti, 318tds (diesel) and later as a 323ti. The 'Ti' title was used for the more powerful versions.

BMW e36/5 in most is identical to the BMW 3 Series (E36) sedan. It was completed the same front fenders, bumpers, lights, windshield, wing mirrors, and the hood. E36/5 also shares an identical wheelbase with e36 cars. And that is all similarities with the E36 sedan/coupe. From the A pillar rearwards, the E36/5 is unique from others BMW E36 featuring unique framed doors, windows, roof, trunk pan, taillights, and suspension.

The BMW E36/5 Compact shares its suspension with both: BMW Z3 and BMW 3 Series (E30). The front employs the E36's standard MacPherson strut design, while the rear suspension uses a semi trailing arm from the E30 - previous model BMW 3 Series.

The BMW E36/5 use of the older semi-trailing arm rear axle (E36's Z-Axle Multi-link suspension) by the reason of smaller size, it allowed for more a lower trunk floor height, fold down rear seats, and an exterior undermounted compact spare tire.

E36/5 compact received mixed reviews from the press. Some claiming the chassis was the most balanced of the E36. Others said that the car wandered and darted in a straight line. It is the rarest and most sought after of the E36 318 lineup by enthusiasts, being the lightest, fastest, best handling and least expensive.

In USA, the car was available with engines: the DOHC 1.8 litre, 138 bhp (103 kW; 140 PS) 4-cylinder BMW M42 engine for the 1995 model year. The next year, to make the car compliant with OBD-II, BMW updates engines to 1.9 liters M44, and all E36 Compacts sold in the USA in 318ti form. There were a wider range of engine choices, outside USA.

Name	Volume	Engine	Valvetrain	Fuel	Output	Torque	Engine code	0–100 km/h,s	Top speed	Years
316i	1,596 cc (1.596 L; 97.4 cu in)	4cyl	SOHC 8V	Petrol	102 PS (75 kW; 101 hp) @5500 rpm	150 N•m (110 lb•ft) @3900 rpm	M43B16	12.3	188 km/h (117 mph)	1994–1999
316i	1,895 cc (1.895 L; 115.6 cu in)	4cyl	SOHC 8V	Petrol	105 PS (77 kW; 104 hp) @5300 rpm	165 N•m (122 lb•ft) @2500 rpm	M43B19	11.9	190 km/h (120 mph)	1999–2001
318ti	1,796 cc (1.796 L; 109.6 cu in)	4cyl	DOHC 16V	Petrol	140 PS (103 kW; 138 hp) @6000 rpm	175 N•m (129 lb•ft) @4500 rpm	M42B18	9.9	209 km/h (130 mph)	1994–1995
318ti	1,895 cc (1.895 L; 115.6 cu in)	4cyl	DOHC 16V	Petrol	140 PS (103 kW; 138 hp) @6000 rpm	180 N•m (130 lb•ft) @4300 rpm	M44B19	9.9	209 km/h (130 mph)	1995–1998
323ti	2,494 cc (2.494 L; 152.2 cu in)	6cyl	DOHC 24V	Petrol	170 PS (125 kW; 168 hp) @5500 rpm	245 N•m (181 lb•ft) @3950 rpm	M52B25	6.4	250 km/h (160 mph)	1997–2001
318tds	1,665 cc (1.665 L; 101.6 cu in)	4cyl	SOHC 8V	Diesel	90 PS (66 kW; 89 hp) @4400 rpm	190 N•m (140 lb•ft) @2000 rpm	M41D17	13.9	175 km/h (109 mph)	1995–2001

The E36/5 Compact car shared the same seats and trim as the full-sized 3-series. The 318ti E36/5 came in 3 different trim levels: Base, Active and Sport. Active line offered an on-board computer, cruise control, leather seats, alloy wheels, foglights and sunroof. The sport package includes M-technic suspension, foglights, alloy wheels, sport seats, and for 1995 only, a limited slip differential.

A Clubsport edition E36/5 was offered in the model year 1995. The car was completed with upgraded suspension, limited slip differential, sport seats, and M-aerodynamic package. Starting 1996, the E36/5 sport package included the M-aerodynamic package like the Clubsport model, with smal exceptions (standart side mirror and without limited slip differential). All 1999 year E36/5 318ti's came with the sport package.

The E36/5 was very popular in Europe, and BMW decide to market the car to North America for the 1995 model year. The E36/5 front-engine and rear-wheel drive combination was unique for the North America.

When introduced in the USA and Canada, the E36/5 318ti never enjoyed popularity in North America. While consumers desired a less expensive BMW, North American consumers, America in particular, dislike the hatchback bodystyle.