The success of premium car brands lives and dies in the compact luxury sedan market more than any other.
And over the past few years BMW has been copping a good, old-fashion flogging from its German rival Mercedes-Benz in this battle, especially since the launch of the new-generation C-Class last year.
Earlier this year the Bavarian car maker countered with the release of its sixth-generation 3 Series, a move that to date has had little impact. But the blue propeller company has spent most of that time fighting without its best performer.
Last week, BMW finally launched the new-generation 320i, a petrol-engined car that has, in the past, accounted for more than 50 per cent of sales in its biggest- selling range.
It also added a new entry-level model, the diesel-powered 318d, which has lowered the cost of getting into the range by $4500 to $56,400 and gives it a distinct price advantage over its main rival.
The addition of the two new models also gives BMW an all-turbocharged engine line-up in the 3 Series for the first time.
The new 135kW/270NM 320i has 17 per cent more power and an additional 35 per cent of torque compared with its naturally aspirated predecessor. It also has class-leading fuel economy of 6.0L/100km, an improvement of 21 per cent.
At the national launch of the new models last week, BMW Australia ensured the test drive through Victoria's Yarra Valley included some of the most undulating and twisting roads in the region.
These roads not only showcased BMW's superb driving dynamics, but also provided an opportunity to fully explore the performance of the all-new engine that delivers power to the rear wheels via a superb eight-speed transmission.
With BMW putting more emphasis on comfort in its standard suspension set-up, the 320i is now capable of causing Mercedes some real concerns. The driving dynamics can also be altered to suit the driver's mood via four modes - Comfort, Normal, Sport and Sport Plus.
Switching between modes adjusts functions such as steering power-assistance, gearshift timing and the amount of input from the electronic stability control system.
The 320i - like the rest of the range - also gets electric power steering, idle stop-start and regenerative braking, which are designed to help improve fuel economy.
And it does not miss out on too many comfort features either, with dual-zone climate control, cruise control, electric front seats with memory, automatic lights and windscreen wipers, parking sensors, Bluetooth connectivity, and an MP3-compatible audio system all standard.
But you need to move up to the $64,600 328i to gain satellite navigation as a standard feature.
Two days earlier Hyundai launched its all-new i30 and included satellite navigation and a reversing camera as standard equipment on its $24,990 mid-spec model.
BMW's other new entry, the 318d, becomes the new gateway into the range. It is powered by the same 2.0-litre turbocharged diesel engine used in the 320d but it is slightly detuned to develop only 150kW and 320Nm - 30kW and 60Nm less than its bigger sibling.
On a drive that included the outer suburbs of Melbourne and into the Yarra Valley, it was hard to imagine needing any more power or torque than what was available in the 318d.
While on paper there are some obvious power and performance differences, on the road the 318d is a lively performer with good acceleration from a standing start and strong mid-range pick-up.
The only reason you would want to step up to the 320d would be to get some of the additional features, such as front parking sensors, electric seats, steering wheel-mounted gearshift paddles and bigger wheels.
Both models have the same outstanding fuel-consumption figure of 4.5L/100km.