Well, an SM car "needs" maybe 450 reliable horsepower - that's about $10,000.00 in engine alone and this will require a beefier transmission, another $2,000.00. Of course a stronger clutch, preferably dual disk with aluminum flywheel, will be necessary.
Then there's the CF front fenders and hood, the 8-point cage (you'll really need this if you start with the lightest FOX, a 1979 hatch, less so with an SN95 hardtop), Penske's, even bigger wheels and tires, rear coilovers. Then there are the "little" things like machined rear end gears, a CF driveshaft, rear end housing mods (custom camber and toe bending, 9" outer ends), drilled axles, dropped front spindles, rear lcas, lighter hubs/brakes, a big-ass rear wing and front splitter. Probably a few more I haven't thought of. Not to mention a lot of setup, testing and tuning of all the new components. If you don't already have a trailer, well, better get one. And a tow vehicle.
Of course, the necessity of any of the above is arguable, but even with all that, you are an also-ran if a national-level M3 shows up. At least in ESP, a Mustang can demonstrably win a National title (pre- and post-rallye car era. at least).
I ran in SM when it started out. As I modified my car, it got faster. But, the class was getting faster more rapidly then I was. I steadily slid downwards in finishing order. Seeing the handwriting on the wall, I decontented my car a bit and found a home in ESP. Yes, some of the rules are dumb and there things I can't do to the car I'd really like to. But, it's home for now. We usually have 5-10 ESP cars locally, but just one in CP and none in EM. It's nice to have someone to race with and, hopefully, beat from time to time.
Mustang - The Great American Kit Car
#50 ESP/SM2 (backup) - Cal Club
Porsche - The Great German Kit Car - #50 SM2 Cal Club - #84 JP PCA