This is a very straightforward and relatively easy upgrade that completely transforms the character of your 323i. The 323i was introduced in Europe in 1978 as the spiritual replacement for the 2002tii over which it offers marginal performance gains. Unfortunately, the 323i was never offered in the U.S. because BMW, along with most other car companies, employed a fuel economy marketing strategy at the time. It was not until 1986, with the introduction of the 325i, that BMW again introduced a performance car at the low end of its product line.
While the 323i performs reasonably well in stock form (certainly better than the 320i that was being sold in the states at the time), it can be transformed into a real hot rod that easily outperforms 325i's and first generation M3's. The secret is to increase the displacement from 2.3 to 2.7 liters. Remember the old hotrodder's adage, "the only substitute for cubic inches is cubic dollars."
A 2.7 liter short block from a 1982-88 528e or 1984-86 325e. This so-called "eta" motor is basically a larger displacement, low performance version of the small-block six used in the 323i. The low performance of the eta motor is due to its low-lift, short-duration camshaft with weak valve springs, small intake and exhaust manifolds, and an economy tuned ignition and fuel injection system.
The eta short block bolts right up to your 323i transmission, motor mounts, oil pan, and cylinder head. Use the 323i's K-Jetronic fuel injection system (drill and tap two holes in the 2.7 block to mount the warm-up regulator in the same place as on the 2.3 block), the 323i's distributor (remove the plug in the 2.7 block where it mounts), and the 323i's front engine covers and flywheel.
If you want to use the eta motor's head, that's okay (the early eta head casting and valves are identical to the 323i's). But you definitely want to use the 323i camshaft and valve springs or performance will suffer greatly. To do this, you must drill oil passages in the three undrilled eta head's cam journals so that you now have a total of seven useable cam bearings as in the 323i head. Don't forget to use the 323i valve springs as well. Also use the 323i intake and exhaust manifolds for better performance.
The small-block six's short block is pretty rugged, but you may want to rebuild it if your 2.7 liter has high mileage. The weak point are the connecting rod bearings, so these should probably be replaced. If so, install new connecting rod bolts. This is mandatory. Also, always use new flywheel bolts and replace the cylinder head bolts with the Torx head type (the cap type head bolts are known to break off and destroy the cylinder head if they get caught under a spinning cam lobe).
The cylinder head should be rebuilt in any case. These heads are known to show wear of the rocker arms and rocker shafts after as little as 50,000 miles. Also don't be taken back by the small size of the ports, especially the intakes. They are scientifically shaped and flow very well.
Improvement in low-rpm performance is phenomenal. The 323i always had top-end horsepower but now it has low-end torque as well. Expect 0 to 60 times to improve by at least two seconds. A limited-slip differential is a necessity if you don't have one already. Also don't forget to wave to those M3's you will be passing and wait until you see the unbelievable look on the faces of those 5-liter Mustang and Firebird drivers.
Questions? Contact Jack Roberts, whom we thank for sharing this information.