Roan Low found this in the April 1998 issue of 'TopCar' magazine, which is published in South Africa.

The next-generation BMW M3, based on the new E46 3-Series is unlikely to be fitted with the current, E36 M3's straight-six engine. The BMW Motorsport-developed 3.2-litre power unit is widely believed to have reached the apex of its road car development.
Instead, BMW has started working on a V8-engined M3 version of the E46, which will allow the company to up power and torque substantially, while enhancing refinement - an integral element of the E46 range. The more compact V8 will also allow better weight distribution and an improved power-to-weight ratio.
Initially, BMW was planning on fitting the 4.0-litre V8 already employed in the 540i and the 740i. But it now appears that the unit will be an design from BMW Motorsport - effectively a detuned version of the eight-potter set to make its debut in BMW's Le Mans racer this year. A six-speed manual transmission, as well as the latest-generation sequential semi-automatic gearbox, will both be offered, the latter with improved software and better shift action.
Cosmetic changes will be subtle, in order not to compromise the finely-sculptured aerodynamics of the standard car, but the wheel size will almost certainly rise to 18 inches, with 35-section low-profile tyres. The car could make its debut as early as next year, at the 1999 Frankfurt Motor