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The BMW 320i was involved in an intense battle with the Alfa Romeo 156 in the Euro STC (Super Touring Cup), a series for 4-door sedans that began in 2000. The series fell under FIA Super Touring regulations, which allowed more engine, suspension and aerodynamic upgrades than Group N. BMW decided to enter the E46-type 320i.

In 2000 the BMWs lagged behind both Alfa Romeo and Honda. The series was reorganized by the FIA in 2001 and the name changed to ETCC (European Touring Car Championship), but the BMW team still failed to produce a win, with the championship going that year to the Alfa Romeo 156. Vehicle regulations were revised in 2002 to compensate for the 156's high top speed, resulting in the rev limit for the 320i's inline-6 being boosted to 9,000 rpm. This changed everything and BMW started producing results. In 2003, the BMW team landed Alfa Romeo's ace pilot, Fabrizio Giovanardi, who had taken the ETCC Drivers' Title the previous three years, and the 320i won ten of 20 races. The company finally realized its dream of winning the ETCC Manfacturers' Championship. Former CART (Championship Automobile Racing Teams) driver Alex Zanardi made his comeback in a BMW 320i in the final race of the 2003 season at Monza. Zanardi, who lost both legs in a crash in 2001, had his 320i equipped with special controls enabling him to drive using only his hands and arms.

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