E46-chassis BMW M3 | Buyer's Guide

By Robert Bowen
Dec 24, 2022 | BMW, E46 M3, Buyer's Guide | Posted in Buyer's Guides | From the May 2011 issue | Never miss an article

Photography Credit: Perry Bennett

[Editor's Note: This article originally appeared in the May 2011 issue of Grassroots Motorsports, when Bavarian Autosport was still in operation.]

The release of a new 3 Series BMW is more than just a model change of some car. For enthusiasts it heralds a new epoch of automotive history, like an ice age or the end of the dinosaurs. 

The 3 Series’ huge enthusiast following and perennial status atop “best of” lists make it extremely visible in our world. Just imagine where you were in 1991 and 1992, for example, when the boxy, E30-chassis 3 Series was replaced—or in 1999, when the updated E46-chassis model made an appearance on our shores. If you’re like the rest of us, you couldn’t help but take part in the fanfare that accompanied each 3 Series launch.


New on the Scene

Even more monumental is the introduction of a new M3. Based on the pedestrian 3 Series body and chassis, the BMW M3 takes the whole package to a new level. The original E30-chassis M3—sold here between 1988 and 1991—was a hardcore machine sporting a high-strung, four-cylinder engine. The car’s wild, boxy flares and tacked-on wing made it hard to miss.

The E36-chassis M3 was refined and much more practical than the original. It was sold in the U.S. from 1995 through 1999, and buyers could choose a coupe, sedan or convertible. The car offered a combination of performance, practicality and an unexpected level of refinement. In place of the E30 M3’s racing-developed, four-cylinder engine was a lower-revving straight six with street-friendly torque. Enthusiast buyers liked the car, but some longed for the original’s hardcore nature.

Following BMW’s tradition, the automaker launched the bread-and-butter model before the M version. The new E46-chassis 3 Series landed here first in 1999.

This new chassis was a further refinement of the E36. Even the overall profile remained remarkably similar, though the new car’s skin was more taut and fluid. The overhangs were reduced significantly, giving the whole line a lighter and more modern look.

When the E46-chassis 3 Series arrived, the press immediately fell in love. Sure, all of the models were slightly heavier than the cars they replaced, and of course they were more expensive, but they were also a lot more powerful. Plus, they were wider and better equipped. The new 328i, for example, made almost 200 horsepower, only 40 less than the previous M3. A few years later, the 231-horsepower 330i further narrowed that gap.

Like its successful forebear, the E36 M3, BMW’s E46-chassis M3 offers only subtle visual cues to indicate that it’s more than just another luxury sedan. Photography Credits: David S. Wallens

With a standard lineup this powerful, the new M3 had a tough act to follow. The factory waited a few years—until model year 2001—to release the new ultimate 3 Series. BMW fans and doubters alike were wowed by the car, its new engine, and its pumped-up performance.

The new M3 was quite a departure from the previous one. Instead of following a detuned-for-America strategy like they had in the past, BMW used the same engine for all markets. Only minor differences, like close-coupled catalytic converters, slightly reduced the U.S. car’s rated horsepower.

The E46-chassis M3 received a new 333-horsepower, six-cylinder engine. It carried the S54 engine code and received all the latest tuning tricks. 

A large airbox containing individual throttle bodies fed air to an aluminum head fitted with dual overhead cams. Continuously variable valve timing on both the intake and exhaust was cutting-edge technology at the time. The 11.5:1 compression ratio was (and still is) just within the limits of being compatible with pump gas. Exhaust fumes left the engine through a neat welded exhaust header and what BMW claimed was one of the lowest-restriction exhaust systems in the world.

However, the engine’s iron block seemed primitive and out of place in a newly developed performance car. According to the German company, a traditionally lined aluminum block would have required too much space between each cylinder, making the engine longer than desired. A sleeveless aluminum block, on the other hand, would not be strong enough for the high power output. A traditional iron block was the answer.

Oiling was also high-tech. A semi-dry-sump system employed a dual-sump design that scavenged oil from the front sump and fed it to a reservoir located deep in the rear sump. 

In many ways, this new engine echoed the one found in the original M3. The S54 was also a screamer, making peak power at 7900 rpm, just a few ticks shy of its 8000 rpm redline.

The standard transmission was a Getrag six-speed unit carried over from other BMWs. It was a tough, smooth-shifting transmission.

Powerful Meets Plush

When it came to creature comforts, overall performance and refinement, however, the E46-chassis M3 was light years ahead of its 1980s namesake. While the new car was comfortable, it still offered some serious performance.

The suspension received aluminum front lower control arms, extensive front and rear chassis bracing, and aluminum upper lateral links in the rear. The rear subframe was unique to the M3, as were the anti-roll bars. The rear differential and spindles were adapted 7 Series pieces that provided enough strength to handle the output of the more powerful engine.

A performance-oriented DSC stability control system worked with a new type of limited-slip differential—the M Variable Differential Lock—to keep the car in line with the driver’s demands. However, it didn’t kill the fun of flogging it around a track. Massive brakes featured 325mm front rotors teamed with 328mm rears. 

The wheels were equally big: 18x8-inch fronts and 18x9-inch rears. The M3 was shipped without a spare tire, so owners got a compressor and fix-a-flat in its place.

The front and rear bumpers, aluminum hood and front fenders also differed from the ordinary 3 Series coupe. The fenders were flared nearly an extra inch on each side compared to the rest of the lineup, helping them swallow those big wheels with minimal fender gaps. 

Neo-retro fender vents meant to echo the 1960-’72 3.0 CSi were perhaps the M3’s most distinctive styling feature, one that spawned thousands of aftermarket copycats. For a time in the early 2000s, it seemed that every lowered Civic had sprouted a pair of M3 fender vents. Several eye-catching colors were offered through the years, including a distinctive Laguna Seca Blue and a mustardlike Phoenix Yellow. 

The interior is purposeful and a bit more posh than those of earlier M-badged 3 Series cars. Under the hood, you’ll find a romping 333-horsepower, naturally aspirated treat. Photography Credits: David S. Wallens

The interior was unique to the M3, with a special steering wheel, rearview mirror, seats and gauges. (However, most of these parts were later available in the 330Ci as well.) The extensive options list included packages containing automatic wipers, leather upholstery, heated seats, Xenon HID headlights, a moonroof, and even a spoiler delete. M3 buyers could basically choose any combination of options they wanted—they could even add a built-in mobile phone.

E46 Evolution

Initially, the new M3 was available only as a coupe with a six-speed manual transmission. Some changes came down the pike, however.

A few months later, BMW began to offer a convertible version of the M3. It was nearly identical to the coupe, although the top could go down, of course. It was also slightly heavier than the coupe and didn’t have the sport seats. Unlike the previous M3, no four-door bodyshell was offered.

Starting in 2002, buyers could opt for a Sequential Manual Gearbox, also known as the SMG-II, instead of the standard automatic. One of the first widely available manumatic gearboxes, the SMG was intended to offer the best of both worlds when it came to shifting. No clutch meant easy traffic driving, while quick shifting and a direct connection to the wheels preserved performance. Contemporary road tests proved this, too, as the SMG was usually neck and neck with the six-speed manual in zero-to-60 sprints.

Several special versions of the M3 were produced through the years, though not all were available in North America. Most famous is the M3 GTR, a special V8-powered M3 intended for ALMS and FIA competition. Only five of the hand-built cars are thought to have been produced, and it’s unclear if any were ever registered for street use. 

BMW campaigned the car in various forms of autosport. Their V8-powered GTR model competed in the American Le Mans Series plus FIA contests. Photography Credit: Courtesy BMW

In 2003, BMW of Europe introduced a special M3 CSL. This lightweight version sported a carbon roof, plastic-composite trunk lid and trunk floor, and a special stripped-down interior.

The M3 Competition Package was introduced on our shores in 2004. It included quicker steering, a unique Alcantara steering wheel, drilled brake rotors, 19-inch forged alloy wheels and different interior trimmings. Those in the know refer to the package by its internal BMW name, ZCP. 

The E46-chassis M3 didn’t see too many changes through the years, and it quickly became a staple on our scene. The car scored wins and championships in just about every venue, from autocross to professional road racing. It also got high marks as a daily driver. 

The end of the model run came in 2006, but there was big news on the horizon: The next M3 would be powered by a V8.

Things to Know

Like so many of our favorite cars, the E46-chassis BMW M3 is still on the downward side of its depreciation curve. With a reported 26,202 coupes and 17,577 convertibles sold in the U.S. market, the E46 M3 is unlikely to appreciate anytime soon. However, the model’s performance, uniqueness and desirability will help examples keep their value better than a same-year 330i or 328i coupe.

In today’s market, you can find the occasional sub-$10,000 E46-chassis M3, but that’s not really the car you want. Those are seriously ragged-out cars that probably have salvage titles. Plan to spend $20,000 for a decent, clean early car. Set aside $5000 to $10,000 more for a nice later example. Not sure of your ability to choose a nice car? Certified preowned cars are still out there.

As with all used European cars, make sure you get one with as much service history information as possible. These are not especially fragile cars, but they do have their quirks, and parts can be expensive. For the same reason, consider a prepurchase inspection at a local BMW dealer or good independent shop. A few hundred dollars spent now could save thousands later.

Photography Credit: Perry Bennett

Engine and Drivetrain

The most well-known issue with the early cars involves the connecting rod bearings. A number of them failed, so BMW issued a recall—Service Information B11 02 03—and instructed dealers to replace rod bearings gratis for affected cars. Make sure that any car you buy has had this done, or budget $1000 for the fix.

“If I’m buying a car that I’m going to take on the track or otherwise beat on a little bit—or is anywhere around the 100,000-to-120,000-mile range—I think these rod bearings are good preventative maintenance, anyway,” says James Clay, longtime BMW racer and owner of BMW tuning house BimmerWorld. 

[Project BMW M3: How BimmerWorld Grew a BMW Passion Into a BMW Business]

Clay calls these solid cars, but he recommends avoiding the SMG transmission for simplicity’s sake. The standard six-speed Getrag is a tough trans, but the synchros can’t tolerate abuse because of their size. “These transmissions are big and beefy, but that means a lot of work for the synchros. Speed shifting or poor rev matching will take its toll on them, making the car harder to shift or necessitating a transmission replacement,” he explains.

Like all late-model BMWs, the E46-chassis M3’s plastic radiator tanks and coolant overflow bottles will become brittle as the car approaches the 100,000-mile mark. Gordon Arnold, sales manager at Bavarian Autosport, recommends replacing the radiator and overflow bottle before a failure leaves you stranded. The E46 M3’s water pump doesn’t have the failure-prone plastic impeller found on the E36 M3, but Arnold still recommends replacing the pump while servicing the cooling system—call it preventative maintenance.

The engine’s high state of tune means the factory did a good job of maximizing the horsepower available in the stock setup, but impressive gains can be made for surprisingly little money if you're willing to break out the credit card and do a bit of wrenching. According to Clay, the best approach to making more power is to install an exhaust header, add a set of pulleys, and have the software tuned. If it’s a track-only car, the catalytic converters can be removed, too. “On the cheap, this is $1500 for 30 rear-wheel horsepower, which is very good in BMW terms,” he adds.

BimmerWorld now offers ECU tuning from Epic Motorsports. Promises include big power and fresher breath.

The S54 engine has a high factory compression ratio, so forced induction may not be the best approach to an otherwise stock engine. 

Body and Interior

“There have been reported issues of subframe mounting points tearing, but we find this can typically be prevented by replacing worn bushings—or installing the proper parts for the car’s intended use—before they take their toll on the rest of the car,” Clay explains. 

“If it hasn’t had window regulators, it will need window regulators,” Gordon Arnold notes. All E46-chassis BMWs suffer from this problem, and Bavarian Autosport has a how-to repair video on their blog, blog.bavauto.com.

The E46-chassis BMWs tend to encounter problems with their light control modules, Arnold notes. It’s part of the light switch. 


The front control arm bushings on all E46-chassis BMWs tend to need replacement at some point. Rear shock absorber mounts and rear trailing arm bushings will also probably need attention. 

According to Clay, the best bang-for-your-buck modifications involve the suspension, not the engine. “A good coil-over with a quality damper like an AST or Moton will take lots of seconds off lap times—or in a street environment, make the car nimble and fun to drive.”

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theonlyiceman53 New Reader
2/2/22 6:30 p.m.

I got this car for free from my son.  He had messed with it for a year trying to get it to stay out of limp mode when it went to top gear. I did a car fax on it and it had been in bunches of car auctions as dealers tried to fix the thing.  I just circumvented the whole mess with a stand along big block Chevy.  It was bad enough just getting that to work with the electronics.  I learned far more about BMW wiring than I ever wanted to know.  It pulls pretty strong for a BMW. Total sleeper from the outside. 


Big Block Chevy

GCrites80s Dork
6/19/22 9:28 p.m.

^Well that's one way to handle it!

Slippery GRM+ Memberand PowerDork
6/19/22 9:56 p.m.

I wonder what it has to do with an M3?

Pete. (l33t FS)
Pete. (l33t FS) GRM+ Memberand MegaDork
6/19/22 10:02 p.m.

In reply to Slippery :

If you thought pulling the valve cover in an E46 sucked, imagine trying to R&R those babies for the valve adjustment every 2k miles or so.  And then adjusting the valves in chassis.  And finding that two or three of the exhausts have gone from .017" lash to .lots" lash and you have to replace the lifters again, which entails pulling the distributor so you can get the intake off...

Justjim75 SuperDork
6/19/22 10:59 p.m.

I need e46 330ci 5m advice if anyone is familiar with 01 3.0 coupes

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