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STCC opted for spectacular looking cars and so on.
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It didn't really work out for them though... the only healthy touring car series in Europe right now are BTCC and to a slightly lesser extent WTCC (still Euro-based) and ETCC.
Touring car racing on a national somewhat professional level on the continent is dead.
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As for performance balancing - did we forget what seriously hit WTCC?
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Well, there is an example of a very well run BoP-based touring car series:
http://www.imsa.com/series/sportscar-challenge
So I guess it is possible that this works out fine. Especially since many smaller European countries are finding that they can't support a full-blown GT3 series either and that spec series make for a poor top of the national pyramid.
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Even with BoP you still need some sort of framework or target performance to work from. Take the following 3 examples:
750MC Hot Hatch - Saxos, Fiestas and the like
UK VW Cup - Polos, Golfs and Sciroccos
EuroV8/Superstars - Merc C-class, BMW 5-series, Audi RS5, etc
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I'm pretty sure they'd go for turbo-charged engines, somewhere around 2 liters, but with the possibility to deviate from that by 400-500cc. Anything smaller doesn't make for particularily imposing cars, anything bigger and you really start to cut down on the number of potential marques and come into conflicts with the various GT3 series.