From E30 Zone Wiki
The history of the 316i starts in 1987. At this point, the M10 engine powering the four-cylinder models was approaching 25 years old, and a new motor had just been launched; the M40, which would power the 318i. To free up the name, the fuel-injected M10 cars were rebadged as the 316i for that year, killing off the 316 in the process.
Despite the name, these early 316i models still have an 1800cc block; exactly the same as the obsolete carb-driven 316, but with significantly improved performance; 105hp compared to the standard 89hp.
However, these original M10-powered 316i's were not to last. One year later, for the 1988 facelift, the venerable M10 was replaced with the brand new M40 engine in a "real" 1.6 flavour, or 1596cc to be exact. The drivetrain in these cars was different in every way; beside the Motronic-managed lump, a new five-gear Getrag box was fitted, mated to a different range of lower-ratio differentials to improve the economy, at the expense of performance.
Towards the end of the production run, BMW introduced the LUX package for 4-cylinder models which gave the 316i, together with the 318i, a large number of items from the options list as standard, although no changes were made to the performance of the car.
Because of the radical overhaul of the range, 1987 cars should be treated completely differently to their post-1988 replacements. While both cars feature the same brakes, steering and suspension, the M10 versions use a different engine management, gearbox and differential setup. Diffs are interchangeable, but the rest, including the exhaust, is not.
All saloon cars feature standard 45mm struts, solid front brake discs and rear drums.
Please also see the E30 316 Register