Cons for the 335: the infamous HPFP issue. Appears to be less of an issue post-recall and with the newer 2011+ models (which have the N55 single turbo, twin scroll, "twin power" engine, as opposed to the N54 twin-turbo engine of previous years). Reliability of previous models below average (Consumer Reports)
Cons for the 328: auto transmission for the 328 models is a little sluggish, in particular with heavier 328 x-drive. (is a GM-sourced unit, whereas the 335i has a well-rated ZF auto tranny. Reliability above average (Consumer Reports)
I was well-versed in the HPFP issue, but test drove the 335i and changed my mind. Car's over 30K now, no issues to date. I only put in Shell V-power (no ethanol) since the beginning. Motor kept getting better over several thousand km, and I'm still wowed to this day... especially in DS mode (make sure you try that
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Honestly, if you drive the 328 x-drive and you feel no issues (try slowing down merging onto a highway and then attempting to rapidly accelerate, that's when you should notice the lag if you feel one...) and/or are concerned about long-term reliability, 328 is a great bet. EDIT: The 2012 328i coupes will also be the last to have the naturally-aspirated classic inline 6's from BMW - they will move to twin-turbo 4 cylinders with the new generation (which starts in 2013 for the coupe). In case you didn't want turbos.
Suggested competition to test drive: Audi S4. And the new 2012 C63 coupe if it is out yet... That's about all I'd test drive. Well, and the M3 too, but that's another story...
I'm looking to purchase the car new so the HPFP issue won't affect me, since the car will be either 2011-2012.
On that note, I really enjoyed the 335i's performance on the highway.
On the other hand, I'm inclined to get the 328i because, as you mentioned, it's reliability.
This will most likely be my last car, and since I'm probably going to have it 10+ years, reliability is definitely a factor (especially since I'm going to be retiring in the next few years or so). I didn't find the performance that much of a drop compared to the 335i but I'm a bit hesistant with the 328i since it's the basic model and it's the one everyone has and such.
I'm definitely going to go with this generation because I'm not really interested at all with the whole turbo 4-cylinder deal. I prefer an inline-6.
I definitely wouldn't purchase the S4 or a C63. I'm 73 years old and I don't think it would be too good if I came to work in my car with a big V8, throaty exhaust, and 19" wheels. Coming from a 21 year old car, I think that would be too flashy for me. Especially if I have this car when I'm 80.
One of the things I like about the 335i is that you get good performance but the overall package is understated (you can get the 335i xDrive with 17" rims).
I would probably be more interested in the A5 as well as the C350 Coupe, but I just don't trust these brands as much. Especially with M-Bs reliablity issues and Audi's newness. I make give them a look as well.