this whole thing got me doing some research on open vs closed deck. the m96 is open deck - floating cylinder sleeves surrounded by a water jacket. under hard use the sleeves can go oval and/or move around. further, it's more difficult to be directive with the coolant and get it where you want to go. also, there's less to attach the heads to so it's harder to maintain higher compression. cheap to make, though.
the turbo/gt2/gt3 is closed deck; the cylinders are cast into a solid block, as are the coolant passages. this fixes the problems described above and makes for a stronger, longer-lasting engine.
there is also the semi-closed deck, which is a compromise of the two above. tuners of other manufacturers (honda, subaru, especially in the turbo world) use deck inserts to strengthen the cylinders. is there a future for something similar in the m96?
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