The more I talk to normal people I find the GTI badge has little to no meening now. It did once but that was before the mk3 and mk4. It only has image with older people imo.
I know if i parked a 1 series in the car park outside work and parked a mk7 GTI next to it and asked the office staff which was the classier and more upmarket 99% would pick the BMW. When asked i bet i would get replys thats just a golf but thats a BMW.
Thats why cars like the 1series Audi A1, A3 exist. For people who are not car enthusiasts and won't know better.
The GTI badge is more of a heritage thing. In MK1 and MK2 it meant you were in pretty much the best performing hot hatch out there, solidly built (putting it head and shoulders above the Peugeot 205 GTI 1.9). They did nowt with it in MK3, but the car got heavier and ugly. MK4 was a joke - huge upgrade on the main car for interior and exterior (for all Golfs), and for the GTI there were 3 engines available initially, including a truly wimpy 2.0 with 115PS. MK5 brought it nearly back up there in the power stakes, but since them the performance competition has peeled away and the GTI has become quite expensive. Only the comprehensive and geniunely useful standard equipment makes it stand out as a better buy than the A3 offerings now (looks aside). The badge now means a great all rounder and well equipped. It is a practical car with a bit of bite now. How many people here bought it for it's relative value for money as much as its performance figures.
A lot of people don't know the cost of a VW now. A colleague of mine who has a Mini Cooper asked me about my Scirocco, thinking that they'd like one as their next car. They thought a GT 170TDI cost £16k new, they were dumbfounded that it was a £24k car.
The GTI is a great car, but it is not the must-have that it once was. Most GTI fans are VW fans, but for the general public it doesn't stand out as the best hot hatch in an increasingly larger group of hot hatches on the market. Whenever I give a lift to someone who doesn't drive a German car, they seem quite taken aback how much better it feels than their Ford or Vauxhall for ride comfort/refinement and interior quality - many people out there don't know what the fuss is about as they've not driven one.
On the other hand, I don't think many people consider the 1 series to be a true BMW - it is built to a price, not a spec. It is definitely trading on its badge rather than its looks (i'm talking generally about the 1 series here, not specifically the M135i) - the BMW for people who can't afford a BMW. Away from the upper dashboard there are some woefully low rent meterials being used in the 1 series interior, hard/scratchy/brittle plastics - the money saving measures are there to be seen. The 3 and 5 series are rep mobiles now, having taken the Mondeos place. The BMW badge image has taken a battering over the last 5 years - you don't have to be very well off to own/run one.