The Ultimate Daily Driver Build: 2000 BMW 540i Wagon

Hey y'all,

I bought this 2000 BMW 540it (aka wagon) a little over a year ago. It's been my daily driver for most of that time and I figured I'd show what I've done to it here. This is what the car looks like at this point:

And now the story of how it got here. I like to write and I like to take pictures so this is gonna be pretty lengthy. Have a seat and enjoy the ride!

It all started in June 2016, when I was browsing Craigslist one night, as I am known to do. All good decisions come from that, right? I was looking for a new daily driver to replace my 2000 M5. While the M5's 400hp and 6-speed manual made it an excellent fun car, the manual transmission and 13mpg made it a pretty mediocre daily driver, especially since my commute was an hour of pure stop and go each way.

I then spotted this bright red BMW wagon, listed for $5800 with 174,000 miles. It looked great in the pictures and the owner said it was in good shape. This is what it looked like in the ad:

Not the greatest pictures (the seller loved angles), but it looked pretty good to me.

The car was located in Los Angeles, and I live in Phoenix. It was a Tuesday night when I saw the ad. So on Wednesday I bought a plane ticket to LA (back when Spirit used to fly Phoenix to LA for $35) and flew out in the evening. I stayed at a friend's place overnight, had a great breakfast of the House of Pies (awesome diner near Hollywood), and set out to see the car. I met up with the seller in Long Beach, and that's when I first saw the car.

It was absolutely stunning in person, like a red jewel. Granted, it wasn't perfect, but the engine sounded great and the interior was in pretty good shape. I took it on a test drive and everything seemed to be in order, aside from three issues. The first issue was that the AC ran at full blast with no other settings. The second issue was that the car kept almost dying at idle. The third issue was the transmission, which shifted pretty roughly from time to time. On the plus side, there were some service records, and the engine already had the timing chain guide problem taken care of by a previous owner (though I wasn't worried about that since I've done 10 chain guide rebuilds at this point). A lesser issue was that the ride was a little rough, but I attributed that to the terrible roads in LA (more on that later).

With the pros and cons in mind, I made the seller an offer, and we eventually settled on a price closer to $5000. Still a bit much considering the mileage and flaws, but when you're looking for a super specific color combination you don't get to be too picky. This car had most of what I wanted: a V8, bright red paint, premium sound system, sport package, and attractive M-Parallel wheels with good rubber.

Once the papers were signed and the cash was handed over, I had myself a 17 year old German V8 wagon in the middle of LA. Phoenix was about 350 miles away, and I had never really driven this car before. So I threw all caution to the wind and hit the road, figuring that if I broke down closer to home it would be a cheaper tow. In retrospect I probably should have checked the oil levels and tire pressure, but I was pretty confident in the car.

The ride was pretty uneventful, aside from hitting some awful traffic on the way out of LA and nearly freezing to death because of the full-blast AC. I actually wore a jacket to keep myself warm inside the car while driving through the desert, which I found to be quite humorous. I did have the foresight to bring a cassette deck aux adapter and a phone charger to keep some tunes going while I was driving, so that made the ride a lot more enjoyable. I stopped at an In N Out in the middle of nowhere and took a picture of the car. I was head over heels in love with this car.

Upon entering Arizona I took a picture during the last part of the sunset:

I made it home around 10pm that night, and I was ecstatic. I had zero issues and got around 20-21mpg the whole way. I started working on fixing stuff in the car pretty much the next day, which I'll cover in the next post.

Very unique combo. I drove a nice 540i/6spd once and liked it a lot, but boring colors are enough to take the edge off my affections. If the paint was in good shape i think i'd rather have the colors i want than the manual trans which could always be added later.

Never seen an e39 wagon in red before, that is really sharp.

Sweet looking Wagon ! I think those are my favorite BMW wheels.

Vigo wrote: Very unique combo. I drove a nice 540i/6spd once and liked it a lot, but boring colors are enough to take the edge off my affections. If the paint was in good shape i think i'd rather have the colors i want than the manual trans which could always be added later.

I looked up the production specs, and it appears that my sport package Japan Red 540it is only 1 of 7 in North America. Who knows how many are still left, a lot of these cars ended up in the junkyards over the years because of neglectful drivers.

While I'd love to have a manual, the 540i wagon never came with a manual in North America, so I have to either swap one in (which I may do in the future) or settle for an underpowered 2.5L/2.8L wagon.

I agree though, boring colors completely ruin a car for me. My M5 was a great car and all, but the gray exterior color didn't excite me one bit. The red on this wagon never fails to make me happy though, especially when I wash it and see just how red it is. This car has taught me to never settle for boring colors.

stuart in mn wrote: Never seen an e39 wagon in red before, that is really sharp.

Thanks! They're pretty uncommon in red, with most of the red ones being the 525it/528it models. The V8 E39 wagons almost always came in silver, white, gray, or black.

Indy-Guy wrote: Sweet looking Wagon ! I think those are my favorite BMW wheels.

Thanks! M-Pars are some of my favorite wheels as well. They look timeless, are quite sturdy, are easy to clean, easy to refinish, and they're lightweight forged aluminum. That makes them the perfect daily driver wheel, and in staggered form like on my car they look amazing (IMO).

Continuing the story, I immediately started working on the wagon the next day after getting it home. I ordered a bunch of parts at AutohausAZ the night before, and they were available around noon that day. The great thing about AutohausAZ is that they're local here in Phoenix so I can pick up parts from their warehouse without waiting for shipping— very convenient for impatient people like me.

I deduced that the AC fan speed being permanently at max was due to a faulty FSU (final stage unit) which is an electronic component that regulates the fan speed. It's like a $40 part and took about 10 minutes to swap out. Here's the new one on the left and the old one on the right:

That fixed the fan speed issue completely which meant I had a fully functioning automatic climate control system. Yay!

As for the poor idle issue, I narrowed it down to a bad MAF so I installed a brand new Bosch one:

After that, the engine idled beautifully. Then I replaced the rubber oil filter housing mounts with new ones, replaced the oil cap with a new one, and replaced the o-ring for the power steering cap. To round things out, I replaced a burnt out foglight bulb with one that I bought from Walmart. One less warning light on the cluster, woohoo!

I then addressed the ugly old steering wheel by replacing it with a facelift-style M5 steering wheel. Not only does this wheel have much better bolstering, it also has tri-colored ///M stitching all around. I already had one laying around so it was an easy 20 minute swap, all plug and play.

Before:

After:

I also experimented with cleaning the seat, and was amazed/appalled by how much dirt came out. Here's a 50/50 shot, you can see just how nasty the seat used to be:

The next day I detailed the car thoroughly, washing it down with dish soap to remove any wax/dirt, clay barring the whole car, and waxing the paint to protect it and get it looking nice. Admittedly, I didn't know too much about what I was doing at the time, but the results came out pretty decent.

Aside from the nasty old carpets, the interior was a pretty nice place after a thorough cleaning:

A few days later, I continued with the maintenance by replacing a whole bunch of filters:

The engine air filter was gross.

The cabin air filters were just as bad. I can't believe people neglect replacing these, it makes a huge difference in the air quality inside the car. The new ones also have activated charcoal to further scrub any smells out, which comes in real handy when I'm stuck behind a diesel truck.

I changed the oil and oil filter, using a fresh new filter and Mobil 1 0W40. I've always used 0W40 for my BMWs, the engines seem to run happily with it and it's available cheaply at Walmart. To round out the maintenance I also replaced the fuel filter. The old one didn't look too bad, but why not have a new one?

I also started chasing down the vibration/shaking while driving. A quick visit to my local tire shop revealed that two of the wheels were severely out of round, as well as being replicas and not genuine. The shop did what they could to balance the wheels, but they recommended replacing or repairing the wheels.

The last issue I chased down was the poor shifting. BMW used to say that the transmission fluid in the 5HP24 was lifetime fluid, which is a load of crap. It really should be changed every 60k miles, which is what they're recommending now. I raised the car up on all fours and drained out the old fluid... it was black and watery, indicating that it was well past its prime.

Once all the fluid had drained out, I dropped the transmission oil pan to replace the transmission filter. As I expected, the filter I removed was original with a 1999 date stamp. I replaced it with a new OEM Filtran filter.

The oil pan magnets had a lot of metal gunk on them. That's pretty normal for a transmission with 175k miles, but it's still good to clean things up as much as possible to keep the oil clean.

After cleaning up the oil pan, it was clean enough to eat out of.

To wrap up the transmission service, I filled the transmission with fresh Febi LT 71141 spec fluid. It's important to use the correct fluid with these transmissions, they're quite picky. The fluid is like $14/quart and you need about 8 quarts to fill the transmission after a drain. The fill procedure is hilarious— you lay under the car and pump the transmission full of fluid until it starts to drip out. Then you start the car and while it's running you keep adding more fluid until it starts dripping out again. To check the fluid the transmission has to be between 30ºC – 40ºC, no warmer and no cooler. You need an infrared thermometer to check that. Gotta love servicing a transmission that wasn't designed to be serviced. There's no dipstick so the only way to check the levels is to lay under the car while it's running and crack open the fill plug.

The transmission fluid change was a complete success— I was rewarded with buttery smooth shifts. Sport mode became usable, whereas before it was an extremely jerky mess. Contrary to what people may say, changing the fluid in these 5HP24 transmissions doesn't break them. You just can't do a power flush, you have to drain the fluid and fill it several times. That gradually introduces new fluid into the system without forcing debris around like a power flush would. This fluid change happened around 175k miles and I'm currently at 194k miles with no problems. Mind you, this is the original transmission.

For the sake of breaking up the madness, I'll continue the saga in the next post.

My cluster display had the typical BMW missing pixel issue, so instead of just replacing the ribbon cable like everyone does, I got an M5 cluster and got a friend to code it to work with my car. Not only did I gain some cool warmup lights around the tach, I also got a useful oil temp gauge that replaced the completely useless MPG gauge (my MPG gauge always read 8mpg whenever I touched the throttle).

About a month after purchasing the wagon, I had my first part actually break. I was driving home from the junkyard one day when I noticed a "check coolant level" warning on my cluster display. The coolant temperatures stayed normal so I made it home without any issues. Once I got home, I noticed a little leak coming from the radiator. I was pretty relieved since that's a common issue and is quite easy to fix. BMW for some reason has plastic sides on their radiators, so after a while they start to crack and leak.

About $250 later, I had a new radiator, new expansion tank, new expansion tank cap, brass bleed screw, fan shroud, and two gallons of BMW coolant from AutohausAZ. And then for some inexplicable reason I decided to do the cooling system refresh late at night on a work night. I make great decisions!

The old parts came off super quickly and the new parts fit in nicely. It's almost like BMW knew their cooling systems were junk and made them really easy to service ;)

With all of the parts installed, I embarked on the long and complex process of bleeding the coolant. First you fill up the expansion tank, then run the engine for a bit, add more coolant, and run the engine again with the bleed screw open to let air bubbles out. You have to do this process several times, allowing the engine to fully cool down between each bleeding session. Since it was super late at night, I did the first bleed around 1am, then went to bed, woke up at 4am to bleed the coolant again, went to sleep some more, and then did a final bleed upon waking up for work at 7am. BMW's are a lot of fun!

After the bleeding process was done, the system consistently ran at around 105ºC, never exceeding 108ºC. Those are the factory specs... BMW likes to run their cooling systems super hot to make the engines more efficient. This also means that minor leaks/air bubbles can be catastrophic due to how pressurized the system is.

Now for the headlights. The old headlights were Xenon but the lenses were severely pitted after 17 years and the adjusters didn't work at all, so the projectors wobbled up and down on bumpy roads. Sure, I could have fixed pretty both with a little bit of work, but I decided to take it as an opportunity to upgrade to some 2001+ headlights that I bought from a friend.

Before on the left, after on the right:

Much better!

The new headlights were a mostly plug and play affair, but I needed to run a switched source of power to get the angel eyes working, since the prefacelift E39's originally didn't have angel eyes.

At this point I had obtained a set of E38 M-Pars from a friend. I needed to get their hubs bored from the E38 72.56mm spec to the E39 74.1mm spec. Why BMW chose to give the E39 (and only the E39) that ridiculous 74.1mm hub bore is beyond me. I paid a shop like $150 to professionally bore out the wheels. I love how well the wheels fit into the trunk of the wagon. This is why wagons are awesome!

After that, I swapped the front tires from the existing rims onto the fronts of the new staggered set. For the rears, I found a pair of old Michelin Pilot Sport tires for cheap. This would later turn out to be a mistake due to how old those tires were, but I'll get to that later. In the moment, the new staggered wheel setup looked great and rode a lot better than the old bent wheels.

Around this time I also did a few minor cosmetic upgrades. I like doing little stuff like this, it's so easy and so satisfying.

New chrome grille to replace the blacked out old one. I like how chrome grilles look on BMW's, sue me.

New hood roundel to replace the worn-out old one:

New OEM clear side markers to replace the cheesy aftermarket smoked ones:

It was all starting to come together nicely, and I was really pleased with how the car looked at this point.

I also bought my first semi-proper toolbox around this time, using the wagon to bring it home. I love doing practical things with the wagon, it just feels so right.

About a month or two into owning the wagon, I got tired of using the cassette deck adapter for playing music. I wanted something a little more modern and with better sound quality. A very popular aftermarket head unit in the BMW E39 community is the Dynavin N6. It looks fairly OEM, is plug and play with our cars, and it supports the proprietary DSP sound system that my car has. It was about $650, and I think it was worth every penny.

Here's what the stock head unit looked like:

Here it is halfway through the installation, this is when I figured out where all the wires went.

As for the GPS antenna, I chose to mount it by the roof above the headliner. Access was pretty easy once I dropped the sunroof button panel. This has worked out quite well, with good GPS reception even in the middle of nowhere. A lot of people mount the GPS antenna inside the dashboard, but that makes for much worse reception.

Here's what it looked like when it was all done:

After some initial setup, everything worked perfectly. I now had iPod/iPhone in, aux in, Bluetooth, and modern navigation. It all worked with my car's stock sound system and the steering wheel controls work just like they always did. Not bad for a 17 year old car! The sound quality improved considerably too, mostly thanks to the better EQ controls that the new head unit had, compared to the primitive bass/treble adjustments of the old stock head unit.

With the audio handled, I started investigating the crashy ride in the rear. Every bump in the road was jarring, and on the highway the rear end felt like it was disconnected. After doing some research, I found that the subframe bushings were to blame, as they are a common wear item with these E39 wagons. The only way to swap them out without removing the whole rear end was by using a specialized E39 subframe bushing tool. Thankfully I knew an E39 wagon enthusiast that lived a little north of me, so I went over to his house one afternoon and we replaced the subframe bushings with brand new Meyle HD solid bushings. These should last the life of the car, unlike the fluid-filled stock bushings.

With two 540i tourings, two 540i sedans, and an 840ci in the garage, I knew I was in good company.

All four bushings looked like this, with date stamps indicating that they were the originals from 1999.

The wagon rode much better after the subframe bushing replacement. At this point it actually started to feel kinda sporty, now that the rear suspension was securely fastened to the body of the car.

For a while after I retrofitted the facelifted headlights, I was a little annoyed at how dim and yellow the angel eyes were, so I swapped in a set of LED angel eye bulbs. Much better.

At some point I also had a wheel specialist come and look at my wheels to check them for straightness since my tire shop said that the front wheels had a bit of a wobble on the balancing machine. He found that the front wheels were indeed quite bent, but he fixed them up and made them super straight which improved the ride in the front considerably. That's the nice thing about aluminum wheels— it's quite easy to straighten out bends without cracking the wheels.

This is how the car looked at this point. Shinier than ever thanks to some new detailing products from AmmoNYC products.

Shortly after that, I took a nice trip up north to a town called Prescott. The company that I work for owns a really nice cabin up on top of a mountain there, so it made for a great weekend getaway. Having the V8 wagon made going up and down those steep mountain roads a breeze. Torque is lovely.

The best part about Prescott is how different it feels from Phoenix, despite only being 1.5 hours away. It's all foresty and feels like a whole different state. The bright red of the wagon contrasted really nicely against all the green, which made for some great pictures, like this one.

On the way home from Prescott the odometer rolled past 180,000 miles. I also picked up a 2004 Range Rover that same day. Whoops. Work on the wagon slowed down for a bit while I worked on the Range Rover, and garage space was pretty tight.

Eventually I decided to address the suspension on the wagon, which was all sorts of awful. The steering had an obvious shake past 50mph, braking made the front feel loose, and the ride quality just wasn't good at all. I replaced all of the bushings, ball joints, and control arms in the front suspension, using Lemforder parts. They cost a small fortune but I wasn't about to cheap out on vital suspension components.

As expected, the control arms were original with a 1999 date code, and the bushings were cracked and starting to separate— not good.

Compare that to the brand new bushing (with the updated design):

After torquing down all the new control arms with the car at ride height on ramps, I took it for a test drive. To say that it was a huge improvement was an understatement! No more steering wheel shake, no more shimmying in the front, and the car went in a straight line upon braking. I felt stupid for not doing the suspension job sooner.

Right around this time, Tire Rack was having a great sale on Continental Extremecontact DW tires, so I figured I would replace the rock-hard Michelin Pilot Sport tires in the rear. I scored a pair of 275/35/18 tires for only $116 each. After I got the new tires mounted, I realized what an idiot I had been for driving around with those nasty old Michelins. They were good tires when they were new, but mine were 6 years old and rock hard, even at lower tire pressures. My tire shop actually had a lot of trouble removing them because of how stiff they were. So the moral of the story is don't buy super old tires on Craigslist. The new rear tires made the wagon ride a lot better, it actually started to feel like the luxury car that it once was.

Great read so far! So many things to love, the wagon body lines, the wheels, the color... I will be following. Pretty awesome that is it 1 in 7!

Hot like fire!

I'm not a BMW guy at all, but this is a neat project, OP.

You have me looking at these again. I had written them off for no manual and bad gas mileage but that's so sharp... 14 city 19 highway rating is really rough. Great looking car though. Harrumph!

Awesome!

I really miss our old e39 wagon...528 w/the sechs gang (6-speed)!

GeneMSP wrote: Great read so far! So many things to love, the wagon body lines, the wheels, the color... I will be following. Pretty awesome that is it 1 in 7!

Thanks! I'm just glad somebody out there cares to read my rambling. My girlfriend says I talk too much about my car so I'm redirecting some of that to here, if y'all don't mind.

I've always loved the way the E39 wagon looked, the designers did an incredible job of making the lines work with the wagon body style. Funnily enough, BMW never offered these wheels on the wagon, despite them being available on other E38's and E39's at the time. The engineers claimed that there wasn't enough room in the back to fit staggered wheels, but that's a load of crap because I have 275's in the back with zero rubbing.

The rarity is kinda cool but otherwise pretty meaningless. With the mileage that's on it, it's not worth very much anymore in terms of money, haha.

AngryCorvair wrote: Hot like fire!

I agree! And with the cooling system running at 108ºC (226ºF) it's literally hot.

Will wrote: I'm not a BMW guy at all, but this is a neat project, OP.

Thanks! I wasn't sure how people would react because it's not a typical racecar build, but I figured it was worth sharing anyways, especially since you don't see too many of these E39 wagons out there.

dculberson wrote: You have me looking at these again. I had written them off for no manual and bad gas mileage but that's so sharp... 14 city 19 highway rating is really rough. Great looking car though. Harrumph!

Hey, if I can influence somebody to make a good (bad) decision, then my job here is done! The lack of a manual with the V8 versions is a bummer, but there are two ways out of that— buy a 525it/528it with a 5-speed manual and enjoy slightly better gas mileage at the cost of power, or buy a V8 and swap it to a 6-speed (which I'll probably be doing).

The gas mileage isn't great, but it really depends on how you drive it. On road trips going around 75-80 I get 20-21mpg, and I'm sure if I slowed down a little I could do even better than that. In mixed driving around town with me beating on it, I average about 16mpg per tank. Considering how much joy it brings me on an everyday basis, it's well worth the extra gas costs. And gas mileage is relative... my other car is a 2003 X5 4.6is that gets like 13mpg no matter what I do, and I used to have a Range Rover that averaged 12mpg, so compared to those two my wagon is rather economical!

I do love the way my wagon looks at this point, I always look back at it whenever I park it. Sometimes I drive it just for the sake of driving it, with no real destination.

91Eunos wrote: Awesome! I really miss our old e39 wagon...528 w/the sechs gang (6-speed)!

That looks really nice! The sport package 528it's with the style 5 wheels look really sharp. I always tell people to go for the 528it if they want a manual E39 wagon. The 2.8L engine has a bit more grunt than the 2.5L engine in the later wagons, and the 528it wagons tended to have more standard equipment, whereas a lot of the 525it wagons were relatively bare.

What happened to your wagon? Sold it?

My E39 528it sport was a five speed, I did 15,000 miles in six months before hydroplaning backwards into a concrete divider on the interstate at 75 mph. I've had four e39 but that was the best one.

chandlerGTi wrote: My E39 528it sport was a five speed, I did 15,000 miles in six months before hydroplaning backwards into a concrete divider on the interstate at 75 mph. I've had four e39 but that was the best one.

Ah, bummer, sorry to hear that. At least you're okay :) I've known people that have walked out of some pretty gruesome accidents unscathed because of how solidly built the E39's are.

Time for another E39?

Been there done that. I've owned four tourings.