Despite being known for its performance segment, at its core BMW is an automobile manufacturer that makes luxury cars. The 7-Series is the German manufacturer’s flagship offering and is traditionally the model that BMW uses to introduce a new design language or technology. BMW puts everything it has to offer into every iteration of the 7-Series, and it’s been doing so since the moniker made its debut in 1977.
Over seven generations, the BMW 7-Series has become widely renowned as the pinnacle of luxury sedans — an everyday limousine for the elite executive. Today’s 7-Series models overflow with opulence, offering a suite of features that make them stand out like an extravagant high-rise amidst a sea of suburban houses. That said, despite all its modern-day gadgety, it’s an iteration of the car from over two decades ago that is considered the cream of the 7-Series crop.
The third generation of the 7-Series, the BMW E38, made its debut in 1994 and set the benchmark for executive sedans at the time. Now, a pre-owned iteration costs a fraction of what it once did, but these heavy-mileage cars can be a handful to maintain and run.
Here’s all you need to know if you’re in the market for a BMW E38 7-Series, from available engine options to the most common issues with one.
BMW E38 — Pioneering Luxury
The BMW E38 followed in the footsteps of the successful E32 and surpassed its predecessor in every way. It offered a wider range of powertrains, was better equipped, and expectedly, sold better than the car it replaced.
The German manufacturer significantly improved the 7-Series with the BMW E38. While it was introduced with the V8 engine that also powered the E32, it would go on to receive inline-six and V12 engine options. Like its predecessor, it offered two wheelbase options — short (i) and long (iL). Some markets also received an extended long-wheelbase version or limousine (L7), but the U.S. was not one of them.
Where the E38 really shined was with its feature list. This was the very first car to feature side curtain airbags and the first European vehicle to come with satellite navigation. It also brought several firsts for the manufacturer, claiming the title of being the first BMW to offer an in-built television and the first 7-Series to be available with diesel engine options. On the flip side, the BMW E38 was the last generation of the 7-Series you could have with a manual gearbox.
Over its 7-year production run, over 300,000 BMW E38 cars were produced, after which it was replaced by the BMW E65.
Available Powertrain Options
The BMW E38 had a rather extensive lineup of engines that powered multiple models. The car debuted with the 3.0L M60 V8, which also powered models from the previous-gen E32 7-Series. Shortly after, the 2.8L M52 inline-six would enter the lineup at the heart of the BMW 728i/728iL.
Does the E38 have a V12?
The BMW E38 was also sold with a 5.4L M73 V12 engine that powered the flagship BMW 750i and 750iL models.
The BMW E38 was also sold with multiple diesel engines — M51, M57, and M67 — but none of them were officially available in the North American market. Only three models made their way to our market, the BMW 740i, the 740iL, and the 750iL. That said, here’s a list of all the engine and gearbox options that the BMW E38 was produced with:
Petrol
- 1995–1998 2.8L inline-six M52 in 728i/728iL, producing 190 hp and 207 lb-ft of torque.
- 1998–2001 2.8L inline-six M52 in 728i/728iL, producing 190 hp and 207 lb-ft of torque. (while peak output figures remained unchanged, the points at which they were produced in the rev band were different)
- 1994–1996 3.0L V8 M60 in 730i/730iL, producing 215 hp and 214 lb-ft of torque.
- 1996–1998 3.5L V8 M62 in 735i/735iL, producing 247 hp and 236 lb-ft of torque.
- 1998–2001 3.5L V8 M62 in 735i/735iL, producing 247 hp and 254 lb-ft of torque.
- 1994–1996 4.0L V8 M60 in 740i/740iL, producing 282 hp and 295 lb-ft of torque.
- 1996–1998 4.0L V8 M62 in 740i/740iL, producing 282 hp and 310 lb-ft of torque.
- 1998–2001 4.0L V8 M62 in 740i/740iL, producing 282 hp and 325 lb-ft of torque.
- 1995–1998 5.4L V12 M73 in 750i/750iL, producing 322 hp and 361 lb-ft of torque.
- 1998–2001 5.4L V12 M73 in 750i/750iL, producing 322 hp and 361 lb-ft of torque.
Diesel
The BMW E38 7-Series consisted of three diesel models — the 725tds, 730d, and 740d — each with its own engine. However, as we mentioned above, none of these cars were sold in our market.
- 1995–2001 2.5L inline-six M51 in 725tds, producing 141 hp and 207 lb-ft of torque.
- 1998–2001 2.9L inline-six M57 in 730d, producing 190 hp and 302 lb-ft of torque
- 1999–2001 3.9L V8 M67 in 740d, producing 241 hp and 413 lb-ft of torque.
Transmission Options
Over its 7-year production run, the E38 was available with two transmission options. Buyers could choose between the more popular 5-speed ZF automatic or a 6-speed manual. Certain markets outside the U.S., where the 725tds, 728i, 730i, and 735i were sold, also had the option of a 5-speed manual.
BMW E38 Through the Years
The BMW E38 went through multiple revisions and updates during its production run. Production began in 1994 for the 1995 model year. Internationally, the range made its debut with the 730i/730iL, 740i/740iL, 750i/750iL, and the diesel 725tds.
The models towards the upper end of the range, the 740i/740iL and the 750i/750iL, came with optional DSC (Dynamic Stability Control), dual-zone climate control, electric front seats, navigation, and curtain airbags at the front.
1996
In 1996, the BMW 728i and 735i models were introduced internationally. Closer to home, the M60 V8 engine was replaced by the M62 engine. This also saw displacement rise from 4.0L to 4.4L. The only car affected by this update in the U.S. market was the 740i.
1998 facelift
The BMW E38 received its most significant set of updates in 1998. The facelift or post-LCI (Life-Cycle Impulse) models were introduced as the 1999 model year cars.
The facelift brought minor styling tweaks, most notably to the headlight and taillight designs. More importantly, nearly all the engines were upgraded. The Niksail bore coating, which proved problematic on the V8 engine (more details below), was removed; the M62 engine was updated to feature variable valve timing on the intake camshaft (single-VANOS) while the M52 received the tech on both camshafts (double-VANOS).
BMW offered an optional Sport Package on select models that included M Sport suspension, higher-spec alloy wheels, contoured seats, and a sportier exterior trim. Contour seats and Shadowline exterior trim.
Following the 1998 facelift, the BMW E38 would continue to receive minor updates until it was discontinued in 2001. These additions included Xenon headlamps, rain-sensitive windshield wipers, headlight washers, upgraded audio systems, adaptive cruise control, and cosmetic changes.
Is the BMW E38 7-Series Reliable?
The BMW E38 has two engine options in our market — a V8 and a V12 — and over the years, the range-topping V12 has proved to be less problematic than its smaller sibling. The V12 M73 engine was essentially two inline-six engines fused together, which is a layout with which the German manufacturer is most proficient.
On the flip side, the V12-powered BMW 750iL is a more expensive car to acquire. And if something goes wrong, you will have to spend more money fixing it simply because more components are involved.
BMW E38 — Pre-Purchase Inspection and Common Problems
Despite being the best BMW had to offer back in the day, these cars are at least 2 decades old. Things will wear out, stuff will break, and that’s perfectly normal. The key is knowing what to look out for in terms of issues and potentially expensive fixes. That way you can avoid turning your new E38 into a nightmare project car that spends more time on the lift than the road.
Powertrain
Taking a look under the hood can reveal a lot about the car. While these Bimmers don’t suffer from too many mechanical issues, they still have a few weak points and common problems that you should check for when doing a pre-purchase inspection. Here’s a quick rundown.
Timing Chain Guide Failure
A timing chain guide failure was notoriously common on the V8-powered BMW E38 cars, which in our market includes just the 740i and 740iL. As its name suggests, the timing chain guides are responsible for the smooth movement of the timing chain. Since the timing chain is metal, the guides are made of a plastic composite to avoid metal-on-metal contact.
Unsurprisingly, this plastic component was bound to wear out in time and eventually fail. Failure came in the form of cracks that would alter timing chain slack, or worse, cause the chain to slip and severely damage the engine.
The timing chain guides should last over 100,000 miles, but we recommend replacing them earlier to avoid the risk of failure and damage.
A faulty timing chain can result in a whining noise from the engine during regular running or start-up and an illuminated check engine light on the dash.
VANOS Failure
In 1998, BMW updated the M62 with a single-VANOS system or variable valve timing on the intake camshaft. The VANOS system has always been a cause of problems for BMWs, old and new, and the E38 is no exception. While the issue typically boils down to the solenoids on newer cars, the VANOS seals were the most common culprits on the older engines. Luckily, this is a less expensive fix.
If your BMW 740i rattles loudly during a cold start, or if there is a clunking noise from the engine, you could be dealing with VANOS failure. A faulty VANOS system will also result in a significant and sudden loss of power.
Valve Cover Oil Leaks
Considering that most of the BMW E38 cars out there have thousands of miles on them, they likely have some sort of oil leak. One of the more common causes is a worn-out valve cover and valve cover gasket. These components are made of plastic and rubber, respectively, and deteriorate and crack from the high-temperature environment they are a part of.
Check around the valve cover for oil build-up or the smell of burning oil to determine if there is an oil leak at the valve cover. Replacing the worn-out parts should immediately rectify the issue. We also recommend checking to see if the oil has leaked into the spark plug bore or cylinder head. This can cause more severe problems, so it’s best to ensure that it isn’t the case.
Excessive Oil Consumption
An older engine will start to consume more oil than it did when it was new. If you notice this on a BMW E38 you purchased, the first thing to do is to check for an oil leak. Oil build-up on the floor under your car or around the valve cover in the engine bay are obvious signs of a leak.
Cooling Issues
The E38 came with an impressive cooling system, but it had multiple components prone to premature failure. The four most notable culprits were the viscous fan, expansion bottle, burst hose, and radiator.
The radiator on the BMW E38 was enclosed in a plastic housing that had the tendency to break close to the top hose connection. Unfortunately, this requires a replacement of the entire radiator, so it can be a somewhat expensive problem. The expansion bottles were another weak point in the cooling system. If they cracked, a large amount of coolant would leak, causing a substantial amount of smoke from the engine bay. This is a tell-tale sign of a coolant leak.
The viscous fan on the E38 runs from the rotation of the main belt from the crankshaft pulley. Sometimes, there isn’t enough torque produced, and the fan will not rotate at the required speed, causing the engine to heat up suddenly. If you have a faulty viscous fan, you’ll find that the engine overheats instantly at idle but starts to cool down as the car begins to run.
Nikasil Bore Coating Issue
As we mentioned earlier in this blog, the first iteration of the M60 engines used cylinder liners made from Nikasil — a combination of aluminum, nickel, and silicone. This caused problems in the U.S. market, where fuels were rich in sulfur. Nikasil reacts poorly with sulfur and causes the cylinder bores to degrade.
As a result, the engines could not combust fuel correctly, and more severe cases resulted in a seized engine. BMW quickly realized this was an issue and offered an extended warranty of 6 years and 100,000 miles for parts of the engine and replaced the Niksail with Alusil.
The only car in our market affected by this issue is the pre-1996 BMW 740i and 740il, but there’s a probability that the previous owner has had the block or engine replaced at some point. Even if a car runs the stock engine internals, today’s fuel is much lower in sulfur content. However, there may be existing damage from when the vehicle was initially run.
Interior, Exterior, and Electronics
Apart from the more expensive engine-related issues mentioned above, several other problems may pop up on an old BMW E38. While these may not be as serious as VANOS failure or something similar, some of them can still end up costing you a pretty penny. Ask the previous owner about the following.
ABS/DSC Failure
One of the more severe non-engine-related issues with the BMW E38 is to do with the ABS unit. The issue is most common on cars built after 1997, and it was pretty common to see the ABS, ASC, and brake warning lights illuminate on the dash.
It was found that the issue was usually caused by a faulty Bosch control unit that works alongside the ABS/DSC unit. The solution is to have the assembly replaced. There have been reports that the fault lights can trigger on and off as the car runs, so we recommend trying to get a longer test drive of the pre-owned E38 you’re looking at.
Front End Wobble
Unfortunately, the notorious front-end wobble was another common issue on the BMW E38. The car’s front wheels would seem to come loose and shimmy, which was usually most notable while braking. However, if left unaddressed, it would become more prominent.
Owners who faced the issue found that the main culprits were worn-out suspension and steering components. This comprises several smaller parts, so narrowing the problem and rectifying it can be time-consuming. If you can afford it, replacing the bushings, drag links, control arms, and other parts would be the best solution.
The Power Steering Filter
Power steerings use hydraulic fluid to run the steering rack. On this particular BNW, the power steering system features a filter that keeps any debris from entering the pump. The power steering filter is attached to the reservoir, meaning that the two have to be replaced together.
This commonly overlooked issue causes some noticeable symptoms, like the front-end wobble we discussed above.
Other Minor Issues
Some other things that you should look out for are rust, water stagnation, and faulty electronics. Considering the age of these cars, it’s almost a given that there will be some extent of corrosion. Check under the wheel arch and around the headlights and taillights, as these are typically where rust forms the easiest. The condition of these parts should give you an overall idea of the car’s condition.
Next, check to see if the bottom edge of the door panels or floorboards are damp or have fungal growth. This could mean that the car’s interior has been exposed to water, perhaps from a flood. You should avoid a vehicle like this as it could also mean extensive damage to the engine.
Lastly, some of the interior plastics on the BMW E38 were relatively poor-quality. The cup holders and glove box are almost bound to fail or break off, and there are multiple aftermarket replacements out there that are of better build and quality.
The navigation system, a first on a BMW, was incredibly glitchy. Add the fact that the maps there are also outdated, and it’s not a system you’ll find yourself wanting to use. The screen can also develop a few dead pixels, and depending on the extent of the problem, the cost of resolving this can vary between a couple of hundred dollars to over a thousand.
Is It Worth Buying a BMW E38 7-Series in 2022?
When the BMW E38 was introduced in 1995, its prices were as high as $100,000 for the range-topping 750iL model. That’s a serious amount of money, even by today’s standards. Today, you can have that very same car for 1/10th the price, and probably even less.
The newest BMW E38 out there is at least 20 years old, so the likelihood of finding one in pristine condition is near impossible. Even the properly maintained ones out there have thousands of miles on them and will require some sort of work to keep running. The issues discussed above are just the most commonly reported ones you’ll find with a pre-owned, high-mileage example — every car is different, so expect to deal with other problems as well.
However, when in running order, the BMW E38 can even put a lot of modern-day luxury cars to shame and is worth all the money you’ll have to spend on keeping it going.
