What speakers for upgrading an old BMW 3-series (E46)?

I upgraded my stockClick the image to open in full size. head unit to an Alpine 147BT, added a JL Audio 4-channel 50 watt amp to power the stock speakers, and added an Infinity BassLink powered subwoofer. My system sounds MUCH better. Now I want to take it to the next level and upgrade the stock speakers (non-Harmon Kardon), but have a few questions....

I have a 2000 BMW 323i touring wagon, so the front speakers are 3-way component systems, the back is a 2-way (tweeters in the rear seat area and midbass in the trunk). There is a company named Bavsound that makes audio gear for BMW's. The Bavsound website states I have a midrange driver and not tweeters in the backseat. One of the major obstacles for the 3-way replacement is that the BMW stock midrange is 2.5" (65mm) and most manufacturers of 3-way component systems have 4" midrange drivers.

So these are my 3 options:

(1) UpgradeClick the image to open in full size. front to a high-end 2-way system and bypass the midrange. Upgrade rear as well to 2-way component system. But the stock midrange does sound pretty nice. Not sure if downgrading to a 2-way but upgrading to a high-end brand will make a drastic improvement (or worsen the sound).

(2) Upgrade to 3-way Focal (or similar level) in the front and install 4" midrange into the 2.5" area WITHOUT cutting away to make room for it. I DO NOT want to ruin the look of the car from the outside. Going non-OEM on the head unit was enough. But, I'm not sure going this route is possible without cutting away at the midrange area to make room. Even If I did, not sure how much the quality of a 4" driver in a 2.5" enclosure will sound. I'd also upgrade the rear as well with a 2-way component system.

(3) Just go with the BavSound Stage 1 for $500. I'm tempted to go with this option. I'm not sure it's in the same league as Focal, JL Audio, Hertz, or Dynaudio, but I'm hoping it's as good as component systems from Alpine, Infinity, JBL, Polk, lower-end JL Audio, Diamond Audio, or Boston Acoustics.

Any other options? These are the dimensions of the stock speaker system in my car:

Front: (2) 6.5" midbass, (2) 2.5" midrange, (2) 1" tweeters

Rear: (2) 2.5" midrange (housed in a smaller tweeter size enclosure), (2) 6.5" midbass

Please advise. Thanks!
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You can just run coaxials in the back. CDT, as some others, make a 2" speaker called the mid-tweeter - I think with an adapter, should be able to get it in the place of the 2'5" driver. @trumpet should be able to put together a 3-way set for you.
 
There are plenty of 3-way components that have a midrange smaller than 4". The problem is finding one with a mounting depth that's shallow enough to fit behind the stock grilles. The CDT 2" mid/tweeter is quite small, but the depth has been an issue with some vehicles. You will probably need a gap of 2" minimum behind the panel, and figure on between 1.5" to 3" of width to clear the back side. If that clearance isn't available the 2" drivers can be flush mounted into a panel. I've conversed with a lot of BMW 3-series owners in the past and the need for custom speaker brackets and the associated labor or DIY technical challenge makes it a tough choice compared to the Bavsound option. We go with CDT Audio speakers because I can mix and match speakers with crossovers to cover virtually any application. If you want great sound prioritized over a factory appearance we should talk.

 
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