BMW E46 Buyers’ Guide — Everything You Need to Know

There are plenty of great BMWs out there, but only a few have reached the iconic level of the 3-series E46. It is the ultimate enthusiast platform that is slowly replacing the E30, which we wrote about extensively, as the new collectible classic. Considering its status and a massive increase in demand for these cars, we’ve put together a BMW E46 buyers’ guide that should help you find a clean, issue-free car. We’ll cover everything from various trim versions to known issues and faults you should look out for. Let’s start with the basics.

The 3-Series Dynasty 

The 3-series BMW car is arguably the most recognizable product this German giant has to offer. Despite being relatively forgotten, the original 3-series, the E21, represented an important turning point in BMW’s role within the industry. 

It solved a major issue for BMW — giving the already exhausted BMW 2002 a fresh, worthy successor. Then came the much more popular E30, a dream car of every suit in the city during the ‘80s. It sold incredibly well, and the appearance of the M3 version solidified the E30’s position as one of the most iconic cars ever made. Today, BMW E30 is a true collectible and a car that every gearhead wants in their garage. 

The E36 that came after was a decent car, but it failed to fill the void left by its predecessor. It took one more iteration of the 3-series for BMW to strike gold once again. 

BMW E46 – The New Classic 

When E46 first appeared in 1998, the initial reactions were mixed. Many saw the new 3-series as a watered-down E36. Sure, it brought on a bunch of interesting features, but it also nerfed a lot of the driving dynamics that E36 was known for thanks to overbearing nanny systems such as Dynamic Stability Control, traction control, and others. 

Yet, as years went by, the E46 had proven to be a far more reliable, better-performing car than the E36. With that said, let’s take a look at all the versions of the car. 

Body Types 

• Sedan (1998-2005) 
• Touring/Wagon (1998-2005) 
• Ci Coupe (1999-2006 
• Ci Convertible (1999-2006) 
• Compact (Non-US markets)

Available Engines 

As far as engines go, the US market never saw an influx of BMWs four-bangers. The E46 was only available with a 6-cylinder inline M52/M54 engines on this side of the pond. Here’s a list of available motors: 

• 1998-2000 2.5-liter M52B25 in 323i, producing 169 hp/181 lb-ft

• 2001-2006 2.5-liter M54B25 in 325i, producing 184 hp/175 lb-ft 

• 2003-2006 2.5-liter M56B25 SULEV in 325iA, producing 184 hp/ 175 lb-ft 

• 1998-2000 2.8-liter M52TUB28 in 328i, producing 190 hp/207 lb-ft 

• 2000-2005 3.0-liter M54B30 in 330i, producing 225 hp/214 lb-ft

• 2000-2005 3.0-liter M54B30 in 330i ZHP, producing 235 hp/222 lb-ft

• 2000-2006 3.2-liter S54B32 in M3, producing 333 hp/262 lb-ft 

Aside from these, Europe and other markets enjoyed a whole range of four-cylinder petrol and diesel engines. 

Picking the Right Transmission 

Overall, most gearboxes that came with the E46 were reliable. However, there’s a hierarchy even among equals. Early production automatic transmissions were somewhat wonky, although the later production automatics weren’t perfect either.

These cars came with ZF and GM gearboxes, where GM units proved to be somewhat more reliable. Some ZF gearboxes suffered from the so-called ‘no reverse’ issue, which drove E46 owners up the wall. GM units weren’t affected, but they had issues of their own. Needless to say, BMW have learned a lesson from the E46, which is why the next gen of ZF transmissions, the ZF6HP, which are pretty much indestructible given that you maintain them and perform regular fluid/filter services.

As an alternative to automatic gearboxes, BMW also offered a 5-speed manual, which later got upgraded to a 6-speed manual. These gearboxes are fairly bulletproof and won’t leave you on the side of the road unless you purposefully abuse them. 

The M3 featured both a manual and a sequential SMGII gearbox that used the same gear set from the manual 6-speed. Both of these are good options if you’re taking the M3 route. 

Trim Levels 

The E46, much like any other production car, came in a variety of trim levels — 4 equipment trim levels and the cold weather package. 

The cold weather package was an option for any E46 and is often not even considered to be a special trim level, but rather an optional upgrade for those who live in cold weather climates. With this trim level, BMW code ZCW, you’d get heated seats, headlight washers, and a ski bag that passes through the rear passenger seat armrest area. 

ZSP 

With ZCW out of the way, we can take a closer look at the performance packaged offered for the E46. ZSP, or the sport package, was the lowest trim level above stock. With ZSP, you’d get larger wheels that came stock with low profile tires, and more aggressive sport seats. 

As far as actual performance upgrades go, cars packing the ZSP trim came with a sportier suspension, stiffer springs, and beefier sway bars. Overall, the ZSP package of features made the E46 a better handling car without going overboard with performance suspension mods. 

ZPP 

Next came the ZPP trim level, or premium package as BMW calls it. Cars fitted with ZPP usually came with all the features offered in the ZSP trim level, with the addition of different wheels, a multifunction steering wheel, different interior trim piece, a moon roof, and power seats. Prior to 2004, if you wanted rain-sensing wipers, you could only get them through the ZPP trim. 

ZHP 

The ZHP performance package is arguably the most impactful trim level of them all. It was offered only for the 330 models and came packed with all kinds of performance mods. 

For one, you’d get a short-throw shifter on a 6-speed manual, 10 more horsepower, completely reengineered suspension, different cams, a whole new body kit that would differentiate your car from any other 3-liter E46 on the road. Another way to tell a ZHP apart from the rest is to check the wheels. These cars run 18” 135 wheels that are fairly unique. Lastly, there’s the carbon lookalike interior trim. 

The ZHP is considered to be the absolute best trim level bar the M3, while some even prefer it to the M3 for everyday use. 

ZCP 

Speaking of the M3, it came with its own little rare trim option — the ZCP, or competition package. Not many of these were made, and you’d be hard-pressed to find one these days, but they are out there. The easiest way to recognize the ZCP M3 is to look at the steering wheel and instrument cluster. 

The steering wheel for this trim level came with no radio and CC commands on the left-hand side of the steering wheel. If you notice that, and you see a 9,000 redline on the tachometer, there’s a good chance you’re looking at the interior of a ZCP M3. 

As far as actual performance upgrades, ZCP came with larger cross-drilled rotors sitting behind custom 19” wheels. The car was also fitted with a special M Track Mode which would give you more leeway before the DSC kicks in. 

Which Engine To Get? 

Before we go any further, it’s worth mentioning that almost all of the engines listed above are reliable. The only exception would be the SULEV M56 engine, which was specifically designed for states with higher emissions standards. 

The M56, which is just a reworked M54, tends to be a true maintenance nightmare thanks to all the additional components they carry to kill the emissions. It’s a general recommendation that you stay away from SULEV cars. You can check whether an E46 is a SULEV version by either running the VIN through a VIN check tool, or by checking the plate located on the underside of the hood. 

With that out of the way, the most recommended engine would be the 330i. It packs just enough power to get you out of a bind and is generally the most reliable of the bunch. The 323i comes across as economical, but the lack of power is felt on the highway. Best of all, the 330i often gets better gas mileage than the 325i, which comes as no surprise considering it’s a newer engine. 

If you’re going for power, then there’s nothing that comes close to the S54 in the M3. It’s the benchmark of anything E46 related and the most wanted powerhouse of them all. Of course, finding a good E46 M3 is an adventure of its own, and an expensive one at that. 

The next best thing is the ZHP 330i. It gives you a bit more power than the stock version, upgraded suspension, beefier anti-roll bars, lower ride height, and even a bit of negative camber to boot. ZHPs are rare these days, but many consider them to be the perfect middle ground between a full-on M3 and a regular E46. 

Is BMW E46 Reliable? 

Reliability was one of the main selling points of the E46 once all of the quirks were ironed out in the first few years of its production. The M52 and M54 are both robust engines that are fairly straightforward from today’s perspective. 

Overall, the E46 is a reliable car, but you have to take into account the average age of this model. The youngest E46 you’ll find out there is over 15 years old at the time this guide was written. 

Pre-Purchase Inspection — Known Issues

Most of these cars already have plenty of miles on them, meaning that reliability is going to be defined by how the car was maintained by its previous owners. A complete pre-purchase inspection of the entire vehicle is a must, but there are several known issues you should specifically look for. 

Rear Subframe Cracking 

Let’s kick things off with a well-known issue that has plagued the early versions of the E46. The rear subframe mounting points were known to crack. This was especially troublesome on more powerful versions of the car, such as the 330i, which would literally tear the subframe open over time. BMW has addressed this issue in later years of production, but you should always start by checking the rear subframe for signs of damage. 

Rear Shock Mounts 

Rear shock mount failure is often attributed to the subframe issue we’ve just mentioned. The point where the shocks bolt onto the car is where the subframe tends to tear. If it does, chances are that the shock mounts will be compromised as well. You’ll need to get the car on a lift in order to properly check for either of these two issues. 

The Cooling System 

The M54 engine, which is found in almost all North American E46 3-series, is a robust piece of machinery. However, as it aged, it revealed several weak points, one of which is the entire cooling system. 

For one, you’ll want to check whether the water pump has been replaced. E46 water pumps tend to last 100,000 miles, so a vehicle that has 130,000 miles on the clock should have a new water pump. If it doesn’t, a preemptive replacement is in order, should you decide to purchase that particular car. We run complete water pump kits for the E46, which simplify this job a little.

But wait, there’s more. The water pump is just the beginning. If the car has a coolant leak issue, it is highly suggested that you rebuild the entire cooling system, including all hoses, the radiator, and the thermostat. The reason being that coolant system failure can be quite severe on these cars, leaving you with little time to react before that aluminum head starts warping due to excessive heat. 

VANOS 

Variable valve timing is a component of just about any modern gasoline engine. VANOS is BMW’s solution that was applied to the M54/52 engines, as well as the S54. VANOS, or Variable Nockenwellen Steuerung (Variable Camshaft Timing in German), is a fairly complex system that uses helical gears, oil pressure, and solenoids to adjust the timing. 

That being said, VANOS is a maintenance item that needs servicing every once in a while. In fact, VANOS solenoids on a 15-year-old E46 could potentially cause all kinds of trouble. Make sure to check this crucial system and budget for its replacement/servicing down the road. 

DISA Valve 

The DISA valve is a crucial part of the intake system on the M54 engine. Engineers at BMW had devised a flap mechanism that sits in the intake manifold and dictates how much air enters the plenum, and when it reaches the intake valves. Overall, it’s a great system that improves fuel efficiency, power, and many other things when it’s 100% functional. 

The issue with DISA valves is that they often tend to show signs of wear after approximately 70,000 to 100,000 miles. In the best-case scenario, you’re looking at a DISA valve seal replacement. Worst case scenario, you’ll have to rebuild the entire DISA mechanism or simply replace it.  

Oil Leaks 

Oil leaks are a normal thing on older cars, which also applies to the E46. That being said, there are certain areas on the M54 that are more prone to leaking oil than others. The issue with diagnosing oil leak problems on these engines is the fact that they are hard to spot. 

Often, cars with skid pan still intact won’t even show signs of oil leaks on the ground. You have to take a gander under the hood, know where to look, and check the known spots from a number of angles in order to spot leaks. 

Valve Cover Gasket Leak

The valve cover gasket is one of the more common places where the M54 engine tends to leak. You’ll usually find that the valve cover gasket has failed near the middle of the valve cover lengthwise. Look for leaks, and feel the perimeter of the valve cover with your fingers to spot any oil trails. 

Oil Filter Housing Gasket 

Next up is the oil filter housing gasket. We’re not talking about the O-ring that sits in the filter housing tread once you pop it open. We’re talking about the gasket that forms a seal between the engine and the oil filter housing. 

S54 Known Issues 

The M3 E46 is the holy grail of all 3-series M cars. The E30 is legendary, but it comes at a close second place when it comes to the pure driving experience. The S54 that comes in these cars is the ultimate evolution of the M54 platform. With that said, it suffers from the same potential issues as the M54, plus the rod bearing problem that was known to permanently park a number of M3s over the years. We’ll dig deep into the M3 pre-purchase inspection in a separate guide.

Are E46s Easy to Work On?

Overall, the E46 is one of the last BMWs that were truly DIY-friendly. These cars are still largely analog in the sense that you don’t need specialized diagnostic tools to solve every tiny issue on the car. Also, there’s room in the engine bay for you to stick your arm down and reach almost anything. 

Whether an E46 will be easy for you to work on, is a whole different subject. These cars require some level of mechanical prowess if you plan on doing most of the work yourself. However, the good thing about the E46 is that you can find an absolute wealth of how-to information for it online, including our little piece of the internet. 

It is one of the most popular BMWs ever made, and there are thousands of owners out there who love their cars too much to let anyone else work on them. Bar a full engine or transmission rebuild, you should be able to find instructions on how to replace just about anything on this car. 

Is the E46 Worth Buying in 2021? 

One thing you have to keep in mind with the E46 is that these cars are fairly old by now. Finding a low mileage one in good condition is possible, but definitely rare. High mileage cars bring a whole array of potential issues depending on how they were maintained. 

If you can find a good example that has had its oil changed on time, where the owner did some preventative maintenance, and one that has at least some kind of service history, it’s a car worth buying. 

How Much is Maintenance for E46? 

Maintaining a BMW is not cheap now, just like it wasn’t cheap decades ago. The E46 is a very robust platform, but it’s still just a car. Genuine and OEM parts can be pricey if you’re getting them from a dealership, but you can definitely find good deals elsewhere. We offer what is arguably some of the best prices around, so you can maintain one of these cars for a reasonable amount. 

However, you could be spending a few grand every year on maintenance if you take your car to a dealership. That figure can be cut in half, if not more, should you decide to do some of the stuff yourself. At the end of the day, these cares are on the affordable side, but the cost of maintenance is still there. Make sure to account for that when you budget your E46.

BMW E46 — Yay, or Nay? 

At the end of the day, the E46 is still a good purchase. If you take a closer look at the car, inspect it properly and check it for all of the known issues, you’ll more than likely end up with a reliable yet thrilling car. The joy of walking out to your driveway every morning and seeing your E46 sitting there is hard to beat. 

Once again, don’t jump on the first car that looks decent. Wait for the right one and don’t settle. If you’re looking for a regular 3-series, know that you have options. If you’re looking for an M3 car, you’ll need to have more patience and a great eye for details. 

Here at Bimmers, we understand the importance of a well-maintained E46. We went above and beyond to put together the most comprehensive source of parts and tutorials for your E46, and many other BMWs. If you’re looking for parts for your BMW, simply head over to our store, select your car, and you’ll be presented with the highest quality Genuine, OEM, and aftermarket parts.