[2] The interior is mostly similar to the E36 saloon models, apart from the folding rear seats and dashboard which share some elements with the previous generation E30 3 Series.

[4] Some cost-cutting was employed in the E36/5 dashboard such as manual air conditioning, compared to the rest of the E36 lineup which had automatic climate control.

[7] In North America, the sole model available was the 318ti, initially powered by a DOHC 1.8 litre, 138 hp (103 kW; 140 PS) inline-four BMW M42 engine.

[10][11] In September 1996 (for model year 1997), the 3 Series Compact received a facelift in line with the remainder of the E36 range.

In 1996, to celebrate the 50th birthday of the German automobile magazine Auto, Motor und Sport, BMW M hand-built one M3 Compact.

Quad exhaust tips, Recaro sports seats, four-point seatbelts, an Alcantara steering wheel and gear lever were specific for this model.

Based on the success of the Saab 900 and Acura Integra, BMW imported the E36 Compact for North America in late 1994 (for the 1995 model year) but ceased in 1999 after a comparatively short four-year run due to a combination of poor sales, and BMW's decision to phase out all four-cylinder vehicles in the United States.

Similarly, the C-Class SportCoupé had a short sales run in North America and was withdrawn from that market while the saloon/wagon remained available.

[16] Mechanically, the Compact shares many elements with the rest of the E46 range, however the steering rack has a faster ratio.

While lauded as a driver's car, the E46/5 received some criticism for its unique headlights and tail-lights which were considered unattractive compared to the rest of the E46 lineup.