Kraut is essentially German for "herb." Like sauerkraut, which you put on hot dogs and such.

I did a search for 320iK and it appears to be some kind of Scandanavian-only variant on the 320i. Not sure what the difference is though, because I don't speak Norweigan. From what I can tell it has a 129 hp 2.0-liter inline six.

It's pretty reasonable to assume the dude was talking about the 325i, not the super eta or whatever it is.