In a recent interview, BMW North America M Brand Manager Matt Russell confirmed the company was considering an M1 successor but has decided against it.
Speaking with eGMcartech, Russell said "A lot of people come to me and ask, does M need a supercar? We've had the choice to do something like that that when we were planning the 1-Series M Coupe." He continued, "Amongst its development, we all pondered: do we do a supercar as in a mid-engined wedge, or some super high-priced front-engined wedge? We've discussed these possibilities. But ultimately, we didn't feel the need to make a very exclusive high-end supercar and we still don't."
The decision is debatable, but Russell contends BMW already builds supercars - they're just in the shape of luxury sedans and coupes.