The only imports that are expensive to mod are European and high end Asian cars. Civics are fairly cheap, and there are thousand of parts out there for them...Now, try finding an Exhaust, intake, and chip for a E46 325i for under 2k...
However, I have figured out a way you can beat him even if he did put in a big bad ass engine:
Step One-Take everything out of the car, and I mean everything. Carpet, spare, back seats, ac, radio....make it to the point to where all you have is a drivers seat, stearing wheel, stick, and nesacery gauges. Take out the windows, sound deadaning material...everything.
Step Two- Buy the motor out of an NSX. TT it, N20, full engine overhaul, total free flow exhaust (no cats or resonators), intake, chip, cams, port it, ignition wires, spark plugs, everything you can think of. Then drop it in. Then upgrade your tranny, get some drag slicks, and a roll cage.
Step Three-Procede to smoke, inhale, injest, suck on, or otherwise take every narcotic you can find, cuz if youve done all of the above, then your gonna need to be REALLY f*cked up to have the balls to race in it...
Step Four-race