The problem the 3er has, is its predecessors, they failed to capture the BMW spirit and many people went over to Merc (myself included [twice]). The new 3er is getting market share back.
When the M sport versions arrive on the scene I am sure you will see a shift to BMW again. I know several people who have traded their C200 in on a 3er lately.
The other issue that BMW has is its extras and options.
Many items that are standard in a Merc (eg: cruise, auto lights/wipers, DAB) are options with heafty prices on a BMW.
So when someone here compares the price of an optioned BMW with that of the Merc with that big 3 pointed star (look at me) the 3er is 8 grand more. When business people are looking at lease payments the Merc will win. The 3er is the better car but it is not going to get the buyer. The same will apply to the 1er / A class
BMW needs to include the items regarded as standard by all the others and keep their prices competitve.
In regard to the 1er's lights look I think BMW just need to have Xennons as standard.
I see noone is going on about that rediculously oversized grill on the new A class.
It looks like a cheap Chinese copy of a CLS front stuck onto a small body.
The reason the A class will appeal to many first time Merc buyers is the big 3 pointed star on the front. ('Look everyone'- it is a Mercedes). If it had a traditional merc grill with a small emblem above it, do you think it would be as popular - Great marketing by Merc
Give me the 1er with its xennon lights anyday.