Fast, exclusive, practical.
Sounds like the BMW M3, right? But instead of the original–and a decent one costs six figures these days–what about the third-generation model? You get more performance and improved usability along with prices that have been a little flat lately.
That original M3 set the bar for a modern performance sedan. Its engine shared DNA with offerings from BMW’s motorsports program, while the flares, wing and front spoiler meant business–and also homologated those parts for the day’s international touring car scene, which the M3 dominated.
[BMW E30 M3: Buy one now? | Buyer's Guide]
In the States, at least, the follow-up M3 was a little softer: no flares, no trick engine breathing through individual throttle bodies. It was a necessary move, however, to meet a price. And BMW sold a lot of units. A lot.
The M3’s third act, based on the E46 chassis and sold stateside from the 2001 through 2006 model years, represented a move back to the original formula. Power came from a 3.2-liter inline-six topped with individual throttle bodies. More tricks: solid lifters, variable valve timing and an 11.5:1 compression ratio. This one could spin up to 8000 rpm while delivering 333 horsepower, nearly a hundred more than its predecessor.
Another nod to the original formula: The pronounced fender flares were back. The rest of the package included the expected brake and suspension upgrades. Limited-slip differential? Standard. So were tightly bolstered seats.
Today’s big question: Can you get in before the next bump?
E46-Chassis BMW M3 Practical Guidance
Tom Plucinsky
Head, BMW Group Classic US
Why the E46 M3? It’s old enough that it’s pure, visceral and analog, yet it drives like a modern car.
With any M car, go in with your eyes open. Service history matters. Just because a car is listed at $20,000 doesn’t mean it's a bargain. You can quickly spend $10,000 to $20,000 catching up on deferred maintenance.
The S54 engine is bulletproof–it can go well over 100,000 to 200,000 miles. The miles themselves don’t kill the engine, it’s how you use it and maintain it.
You should replace rod bearings periodically. It’s a high-revving engine with tight clearances. If it wasn’t regularly warmed up adequately or improper oil was used, bearing wear gets accelerated.
It’s a 20-year-old car. Plastic parts get brittle, such as those in the cooling system. Thermostats and water pumps should be replaced at 100,000 miles. Coolant specific to the car must be used or you’ll have galvanic corrosion.
The VANOS system needs periodic attention. Seals go after a while.
You may see cracking where the rear subframe attaches to body, especially with drivers who aggressively shift. Aftermarket kits exist to fix this.
Rubber deteriorates over time, so check all the bushings in the suspension.
About 25% of the cars came with the SMG-II automatic. The hydraulics can start acting up on those. The good news is that they’re basically the manual transmission and can be converted to a full-fledged one for $2000 to $2500.
In North America, the E46 M3 came as a coupe and convertible. A Competition Package was offered on the coupe only. Under 400 Competition Package cars were produced, with roughly half coming to the U.S. The package featured quicker ratio steering with an Alcantara steering wheel, revised suspension settings with a 10mm lower ride height, bigger brakes, cross spoke wheels from the CSL and an early version of M Dynamic Mode.
There were 40,000 E46 M3s sold in the U.S. Most parts are still readily available from BMW, and there’s aftermarket support.
About 80% of the parts, though, are unique to the E46 M3 when compared to the E46 3 Series cars.
In 2004, there was a Life Cycle Impulse with minor changes, such as a revised deck lid handle and LED taillights.
The market is getting stronger for the car. Every generation falls in love with cars from their childhood that they couldn’t afford then. We’re coming into an era where 2000s cars are becoming more popular.
Comments
spkorb
New Reader
4/2/25 6:21 p.m.
Just wanted to throw in the e46 estate wagon with 2wd and a 5 speed as an "also ran". Just a little simpler and you can change out the water pump and thermostat in 20 minutes. My E91 Estate water pump was a $900 part and took me two weeks plus a weird heart chamber aorta thingie with the thermostat. I even found all the bolts! :). I think the Estates will always be crowd pleasers, pretty well taken care of and steady if never rocketing value.
In reply to spkorb :
I had a chance to buy a friend’s rear-drive E46 Touring–with a stick–for like $3200 several years back.
I had just gotten something–Subaru, 240SX, can’t quite remember–and I’m still kicking myself for passing on the deal. And, likewise, he’s kicking himself for selling it.
My parents used to have an E91 Touring, too.
How about E36 Tourings? Not sold in the U.S., so there’s definitely a cool factor.
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