‘With age comes wisdom’ is a cliché way to start an article, but it’s a better opening sentence than ‘I used to be stupid’.

Yep, a much younger Dave absolutely despised the E36 Compact based on looks alone. It took years for me to forgive BMW’s designers for cutting the posterior off an otherwise fine-looking automobile. I was naively unaware that, like the M Coupé, BMW had actually stuffed a real driver’s car into a visually-polarising package.

Wheelbase to wheelbase, standard E36 Coupés and Compacts measure out the same. The eight-inch difference in overall length comes (in hindsight, quite obviously) from the compact trunk area. Curiously though, the Compacts do not share the same multi-link suspension the rest of the E36 family does. Compacts step back a generation, utilising the semi-trailing arm rear suspension from the much-beloved E30. Z3 chassis cars also share this suspension configuration and both are noted as being incredibly fun to drive and somewhat tail-happy vehicles.

The difference in handling dynamics is rather significant. Halfdan Vatn, the owner of this Compact, credits the rear suspension as a key factor in his decision to go with the model. Halfdan is very familiar with the BMW lineup; he’s had a roundel on his steering wheel since the age of 16.

Through his years of BMW obsession, Halfdan has split his time mostly between the E36 and E28 chassis. He’s also become quite adept at using the BMW parts bin to create cars BMW corporate never saw fit to release.

An E36 Touring was one of the first he built in this ‘what if?’ methodology. On paper, that car should have been an absolute blast to drive. In reality, it fell a little short of expectations.

Somewhat disillusioned and curious about the growing buzz surrounding the E36 Compact, Halfdan had a go behind the wheel of an S50-swapped example. That car was everything the Touring should have been: unique and a pleasure to drive. The Touring was put up for sale almost instantly.

Halfdan has since owned two Compacts. Tragically, the first saw an early end thanks to a moose both abruptly calling, and claiming, shotgun.

That car was replaced with this car, which at the time was white and fitted with an S50 engine from an E36 M3. A desire for more power than the S50 offered snowballed into this one-of-a-kind green machine.

If you’re unfamiliar with BMW’s engine lineup, I do apologise in advance for the next few paragraphs, as it will likely seem like alphabet soup.

In the search for more horsepower, originally an M54 motor was sought out. Halfdan actually found one rather quickly and told the seller he needed 10 days to arrange pick up. Despite initially agreeing to the later date, a few days before the arranged pick up time the seller sold the engine to someone else. Unfortunately, Halfdan had sold the S50 in anticipation of owning an M54, leaving the Compact temporarily heartless.

Spilled milk to, well… less spilled milk, the opportunity was used to shoot for the stars and Halfdan did so with a 335i N54B30 engine from an American-spec E92.

In layman’s terms, that’s a 3.0L twin-turbo mill stuffed under the hood of a car that originally came with a 1.6L inline-four. Before being dropped between the strut towers, MMP turbo inlets, Precision Raceworks coil packs and an aftermarket intercooler and oil cooler were added.

Behind the straight-six is a 6-speed N54 transmission running a Motiv twin-plate clutch. The exhaust you see poking out the rear is a Supersprint system with a Scorpion muffler.

Halfdan wasn’t satisfied with simply putting the heart of an E9X in his E36. Flagship E9X models are known for their creature comforts and Halfdan wanted all of them.

It took two complete E9X cars – and parts from many others – to equip this 1995 Compact as though it were a flagship model from 2004. The first petrol donor car wasn’t the highest trim level, so a higher-trim diesel car was purchased as well. However, diesels are managed by Siemens programming and petrol cars Bosch. Undeterred, both harnesses were stripped down and combined into one.

After countless hours of soldering, the car is perhaps the most technically advanced BMW Compact on the planet. The rear hatch is electronically operated, it has steering angle sensors, dynamic traction control and the rather complex E9X onboard computer. Halfdan was so far ahead of the curve with a swap like this that several companies have since asked if he would produce harnesses for them. Halfdan declines such offers explaining, “I actually hate wiring… it’s just a necessary evil.”

During the build, Halfdan noticed his jack points were rather soft, a tragically common E36 ailment. As you may have guessed, he doesn’t operate in half measures. The car was soon torn down for a complete restoration.

After floor repairs, every suspension part was painted or powder-coated before polyurethane bushings were installed throughout. KW V3 coilovers have also been fitte and various M/Z3 parts, from E36 to E9X have offered up components such as brake rotors, differentials and axles.

Topside, the most obvious change is the addition of Fitment Lab overfenders. Halfdan once again became a victim of his own desire for perfection by having his friend and paint man Geir Ove Vassili make them wider than they arrived out of the box before spraying the car.

The added real estate allows 245 and 285-section rubber to fit around 18×9.5-inch and 18×11-inch Hamann PG1 wheels by O.Z. Racing, custom rebuilt by Ola Sørstrand.

Inside Halfdan has created a superb sport/luxury combination. Sparco Evo seats have been retrimmed in peanut butter leather and TAKATA Racing harnesses find their anchor points on a Wiechers-Sport roll bar.

Hiding in plain sight within is the E9X dash that flows into the matching console. It’s an incredibly factory-looking retrofit that’s easily overlooked by those not versed in the Bayerische Motoren Werke world.

As a convert to the ‘E36 Compacts are treasures’ crowd, I think this car looks stunning. However, looks are nearly irrelevant because its true standout feature is how seamlessly new technology has been integrated with old. The cleanliness of this car overall almost betrays just how in-depth of a build it is. Halfdan has created a top-tier example of just how great a BMW restomod can be when performed by an absolute fanatic.

Dave Thomas 
Instagram: stanceiseverythingcom

Photos by John M. Hammervoll
Instagram: jmhammervoll