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E46General discussion and technical help for 1999-2004 3 series cars.
323i was e46 from '98 on. On the freeway, expect about 28 mpg from a stick shift or 26 mpg from an automatic. Around town, it all depends on how heavy your foot is. The 323 has a nice torquey cam and could have pulled taller gears. If they had gone for taller gears, I believe that they could have gotten a couple more mpg out of it.
The most fuel efficient BMW I have driven is my '97 328i 5 speed. Solid 30 mpg on the highway from a car that will smoke the rear tires and zip up to 120 mph in short order. It has 255k miles on it and still looks and runs great. The '97 e36 was one of BMW's best efforts.