The M1's development was initiated by Jochen Neerpasch, head of BMW Motorsport, who wanted to build a competition car capable of challenging Porsche in Group 5 racing. The requirement for a mid-engined layout was stipulated from the outset. Unable to produce the required 400 road-going homologation examples in the necessary timeframe, BMW entered into an agreement with Lamborghini, engaging Gianpaolo Dallara to design the tubular steel space-frame chassis and Lamborghini to assemble prototypes and manufacture the vehicles. After seven prototypes were built, Lamborghini's deteriorating financial position ended the arrangement, and BMW reassumed control of the project in April 1978.
The fibreglass body was designed by Giorgetto Giugiaro at Italdesign, drawing inspiration from the 1972 BMW Turbo concept. Body manufacture was handled by Italian firm TIR in Reggio Emilia; chassis production by Modenese firm Marchesi. Assembly of the body and interior was completed by Italdesign in Turin. The partly finished cars were then delivered to German specialist manufacturer Baur for final assembly by hand. BMW Motorsport in Munich performed final inspection before delivery.
The delays caused by the Lamborghini situation and changes to Group 5 regulations meant the M1 ultimately competed in Group 4 racing rather than the class for which it was designed.
The M1 is powered by a 3,453 cc straight-six engine designated M88/1, developed by Paul Rosche. The unit features twin overhead camshafts, four valves per cylinder, and Kugelfischer-Bosch mechanical fuel injection with Magneti-Marelli ignition. Power output is 277 PS (204 kW) at 6,500 rpm with 330 N·m of torque at 5,000 rpm. The engine drives through a five-speed ZF manual gearbox with a 40 per cent locking limited-slip differential. Top speed was 265 km/h.
The M88/1 unit was subsequently used in the South African specification BMW 745i (209 examples, 1984–1986), the E24 M6/M635CSi, and the E28 M5. Suspension is by double wishbones at all four corners with adjustable coil springs and Bilstein dampers. Brakes are ventilated steel discs, 300 mm at the front and 297 mm at the rear. Campagnolo alloy wheels were fitted at 7×16 inches front and 8×16 inches rear, carrying Pirelli P7 tyres.
In 1979 Jochen Neerpasch devised the BMW M1 Procar Championship, a one-make support series to run alongside selected Formula One rounds. The series was intended both to aid BMW's homologation targets and to showcase the M1 alongside the leading Formula One drivers of the day. Niki Lauda won the 1979 Procar Championship and Nelson Piquet won in 1980.
An M1 Art Car with bodywork painted by Andy Warhol was entered at the 1979 24 Hours of Le Mans by Hervé Poulain, Manfred Winkelhock, and Marcel Mignot. The car finished second in the IMSA GTX class and sixth overall.
The M1 was campaigned at Le Mans from 1981 to 1986 in the Group B category. In rally competition, a Pro Car was converted to Group B specification by BMW France and entered from 1982. The 1984 season was the most successful for the rally programme: Bernard Béguin, a former European Rally Championship champion, won back-to-back at the Rallye de La Baule and Rallye de Lorraine, and claimed second place overall in the ERC at the Rallye d'Antibes.
The M1 was the first mid-engined BMW automobile to be mass-produced; the company's second would be the i8 hybrid in 2014. In 2004, Sports Car International placed the M1 tenth on its list of the top sports cars of the 1970s. BMW marked the M1's 30th anniversary with the M1 Homage concept unveiled at the Concorso d'Eleganza Villa d'Este in April 2008. The BMW 1 Series M Coupé (E82, 2011–2012), a high-performance variant of the first-generation 1 Series using the N54 turbocharged inline-six and a six-speed manual transmission, was considered a spiritual successor and was deliberately given the abbreviated name "1M" rather than "M1" to avoid confusion with the original car. That model was in turn superseded by the BMW M2 in 2016.
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