The diesel idea had previously been "confirmed" by one source, and Biermann acknowledged to Inside Line that if the technology were there, M Division wouldn't rule it out, but at the same time, he says the diesels currently available just don't provide the dynamics necessary to merit the M badge. A 5-Series M-tuned diesel had been the rumored candidate for precisely that treatment, but outside of the usual M Sports package, it doesn't look like it'll be happening soon.
2008 BMW M1 Homage concept
Nevertheless, Biermann told Inside Line that everything BMW does these days has to make money, and that includes the M Division. So for now, we'll settle for the regular production-based cars like the 1-Series M Coupe and the upcoming 2014 BMW M3. Happily.