The 114i makes a lot of sense in countries like Norway. Because of tax on power output, it is about 4500 euros cheaper than a 116i. And with very low speed limits on our roads, it takes the same time from A to B with a 114i as with an M135i.
Besides, the 114i has a lot of tuning potential. I'm guessing that many of the owners will chip tune the car and not tell anyone. That way they can have the power of a 118i for 2/3rds of the cost.