The 1984 / 1985 318i was the first "E30" body-style BMW sold in the United States. They were sold as an economy model, sporting very good gas mileage (at the cost of engine performance), vinyl or cloth seats and few amenities. While in many ways similar to the more common (and more expensive) 6 cylinder 325i / is / e / es cars, there are a number of significant differences.
The 318i is powered by the "M10" designated single overhead cam, chain-timed 4-cylinder developed in the '60s by BMW for its "Neu Klasse" sport sedans, begining with the 700, and continued into the BMW 2002 and 320i. Engine management is provided by an electrical-analog Bosche L-Jetronic fuel-injection system. The engine makes 101 horse power in stock form, and red lines at 6200 RPM. While not an ideal design, especially compared to highly developed modern Japanese 4 bangers, it is an inexpensive and race-proven engine.
The chassis is similar to the the E30 6-cylinder cars, however there are a few differences. The battery is located in the engine bay as opposed to the trunk, the car has less sound deadening, a different rear sub-frame and smaller differential. The early 318i's came almost exclusively with manual windows and fewer 'amenities'. They have additional budget 'features,' including rear drum brakes. Non-vented front rotors and rear drum brakes complicate stopping in a race environment. While it's a light, low powered car, the rear drum brakes overheat very quickly. Additionally, they are much more difficult to service than the front caliper / rotor setup.
As an owner of both a 1984 318i and a 1987 325i, I prefer the 318i on the track. While it has much less power and can feel uncertain under heavy braking, the car is significantly lighter and better balanced than it's 6 cylinder sister.
The 1990 - 1991 "Dual Cam" 318i / is, also in the E30 body style, is a similar looking, but very different car. It can be immediately distinguished by smaller 2.5 mph bumpers, and mirrors that share the body color. The late-model 318i / is has the larger front calipers and vented rotors of the 6 cylinder, as well as rear disc brakes. It makes significantly more power, due to a much more modern engine configuration. When thoroughly prepared, they make very fast and competitive race cars.
My choice of an '84 318i as a dedicated track car was largely by accident. A 1977-83 E21 320i was more within my budget, however I found a ugly, but mechanically sound 318i for $1500, the top of my budget. Once I decided to go racing, I weighed the pros and cons of the 318i against the more common, more tunable and faster 325i. After much head scratching, I decided to stay with the 318i. It might not be as fast, and it probably didn't save me much money -- but I have just as much fun with it as I would have with a bit more torque. At some point in the future, I can replace the drive train, rear sub-frame, brake master cylinder and engine management system to convert it to either a dual-cam 318i or a 325i. For more details, see my UnSage Mechanic articles.
If you're interested in learning more about this or other 3-series cars, I found this to be a very helpful book:
BMW 3 Series Enthusiast's Companion