The new BMW 3-series starts at 2.0 ltrs for both petrol and diesel engines. Even the 318 is 2000cc.
And I think its wrong to blame the sales of the Merc E200 for the "extinction" of the 1800cc BMW variants. Cars evolve. The 316 -> 318 -> 320.
Same way the Corolla/Civic has evolved from a 1.6 ltr engine to a 1.8 ltr engine. Cars are always evolving, thats all.