This is very sad news to me, on both the X3M and Z4M.
I was really looking foward to an X3M to replace my X3 in a few years but oh well not too big of a deal, although it makes a lot more sense than a X5M or X6M (weight and size the X3 makes a lot more sense to make a full blown M). At least bring a Diesel M Performance to the US!!!
The Z4M is really sad, not that I am in the market for one, but having owned a Z3M and Z4M Coupe, those were the cars that got me into the "M" brand along with my fathers 2002 M3. For those talking about diluting the M Brand and glad they aren't making these, how in the world could a Z4M Dilute the M Brand? that is just silly. It does make sense they aren't doing it with this generation as the Z4 has really climbed into a whole new market, we used to see tons of Z3s and Z4s on the road before the current generation but the price jump really took the car into a different market completely, a market that might not care if there is an M or not, imagine what it would cost, $90K? Hopefully if they ever do release a Z2 Coupe that will get full blown M Treatment and not just M Performance. Imagine a new M3 turbo engine in a small Z2 coupe (like the size of the past Z4 coupe) although I realize it will probably be more like a 1M engine, 350 HP or so.
Also does this mean no chance of a X4M? again makes a lot more sense than a X6M... I really think BMW just wanted the new M3 engine to debut in the M3 and not in the X3 (like the M5/M6 engine debuting in the X5M...)