BMW's F30-series 318i is claimed to average 5.4-litres of fuel consumed per-100km, measured on a combined cycle of city and highway driving. This is quite efficient for a large four-door car.
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So long as it is serviced on time and looked after well, the BMW 318i can be a great, reliable and enjoyable mode of transport. Although it is no tar-burning supercar the 318i has been known for 30 years as a well-made, pleasant way to get around town. Older second-hand models should have a professional inspection before purchase to make sure they have been serviced regularly and not driven without car, as this can affect the car's long-term reliability.
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Trade it in on an M3. Realistically, modifying your 318i is a legal minefield and doesn't really make sense given BMW produce higher-performance models in the 3-series line-up, starting with the 328i and going all the way to the ridiculously fast M3.
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The BMW 3 Series 318i 1984 prices range from $1,980 for the basic trim level Sedan to $10,670 for the top of the range Convertible John Player Special.