No longer content with selling expensive high-profit cars, German makers are building smaller, cheaper models to hook drivers into the prestige lifestyle.

The new BMW 1 Series, an update of the Series Two range first launched in 2011, costs from $36,990 for the base 118i variant.

Other models are the 118d (diesel), 120i, 125i and M135i – the last topping out at $62,900 for a 240 kiloWatt track-burner.

The old Australian motoring values of more-metal-for-your-money don’t apply to the 1 Series. It’s a small 5-door hatch, but instead of size the buyer gets German engineering and quality, a sporty, nimble drive and a good equipment specification.

Standard on all variants are an eight-speed automatic transmission, real-time traffic information feed, reversing camera and rain-sensing wipers.

The mid-range 125i with standard M-Sport pack and a $48,900 price should be popular as a good balance between comfort and performance. Its engine produces 160 kW and is matched by M-Sport brakes and suspension.

The 1 Series has fresh new styling front and rear designed by an Australian, Calvin Luk, who found his way to Munich via design school in Pasadena.

One feature separates the 1 Series from its German compact rivals – it’s the only one with rear-wheel drive, a key attraction for sporty drivers.