The BMW M cars of 1998–2001 — principally the E39 M5, the E36/E46 M3, and the Z3 M Coupe and Roadster — are firmly in modern-classic territory in the Australian used-car market. The E39 M5's 5.0-litre S62 V8 (294 kW), the E36/E46 M3's S50/S52/S54 inline-sixes, and the Z3 M's compact performance package all command strong prices — but ownership is expensive and demanding. Understanding the specific weak points of each engine before you buy could save you from a very costly surprise.
VANOS variable valve timing (all M engines)
Every M car of this era uses BMW's VANOS variable valve timing — single VANOS on the S50/S52 (E36 M3), dual VANOS on the S54 (E46 M3) and S62 (E39 M5). Seals, solenoids and internal pistons degrade with age and heat, and VANOS failure is one of the most consistently reported issues across all these models.
- Symptoms: rough or lumpy idle, loss of low-end torque, hesitation under acceleration, and stored DME fault codes. A cold-start metallic rattle that clears within seconds is a warning sign on the S54.
- Fix and cost: A VANOS seal rebuild kit is the standard fix. Budget roughly $600–$1,500 AUD for parts and labour at an independent BMW specialist. Solenoid replacement on the dual-VANOS (S54, S62) adds cost.
Rod bearing failure (S54 and S62 — serious risk)
S54 (E46 M3 and late Z3 M)
The S54 is notorious for connecting rod bearing failure. Revving to 8,000 rpm places significant load on the big-end bearings, and BMW's original service intervals were too long for the stresses involved. BMW issued a campaign addressing the oil pump and rod bearings on certain early E46 M3 production runs; Australian coverage should be verified through BMW Australia's recall portal. Confirm whether rod bearings have been replaced — many informed owners do this preventively.
- Symptoms: deep knocking under load that worsens rapidly. By the time it is audible, damage is often severe.
- Fix and cost: Preventive replacement is strongly recommended — typically $1,500–$3,500 AUD. A knocked engine may need a full rebuild or replacement.
S62 (E39 M5)
The S62 warrants the same attention. Rod bearings can wear prematurely on cars run on degraded oil, and pre-emptive replacement is widely recommended by E39 M5 specialists. Budget $2,000–$4,500 AUD given the labour intensity of working on the S62.
Timing chain and guide rails (S62 — E39 M5)
The S62 has three plastic timing chain guide rails that degrade over time. The primary chain tensioner can also lose tension as it ages. Plastic debris circulating in the oil accelerates wear elsewhere.
- Symptoms: start-up timing chain rattle, plastic particles visible at an oil filter change, rough idle.
- Fix and cost: Replacing the timing chain and guide rails on the S62 typically requires dropping the engine subframe — a major job. Expect $2,500–$5,000 AUD at a specialist. Upgraded aftermarket guide rails are recommended over OEM plastic items.
Throttle valve actuators (E39 M5)
The S62 uses eight individual electronic throttle valve actuators. Internal plastic gears wear over time, causing actuator failure — a well-documented and frequently discussed issue in the E39 M5 community.
- Symptoms: engine enters limp mode with EML and DSC warning lights; the car may run normally for a few minutes before symptoms appear.
- Fix and cost: Actuators can be rebuilt by electronics specialists or sourced secondhand. Budget $800–$2,500 AUD. Wiring connectors near the actuators become brittle with age — handle carefully during any work in this area.
Cooling system — plastic parts and overheating (all models)
Cooling system failure is arguably the most common roadside breakdown across the entire M range of this era. Thermostat housings, expansion tanks, radiator end tanks and water pump impellers are all plastic, and all become brittle and fail suddenly rather than gradually in Australian conditions.
- Affected models: All — E36 M3, E46 M3, E39 M5, Z3 M. The E46 M3 expansion tank is a particularly noted failure item.
- Fix and cost: A full cooling system refresh — expansion tank, thermostat housing, hoses, water pump, thermostat — is strongly advisable on any car without recent records. Aluminium expansion tanks and metal-impeller water pumps are worthwhile upgrades. Budget $800–$2,000 AUD for a comprehensive overhaul.
Rear subframe cracking (Z3 M Coupe and Roadster)
The Z3 M has a documented structural weakness at the rear differential mount. Engine torque can crack the chassis around the differential mount ears — an issue specific to the M variants, not the standard Z3.
- Symptoms: creaks or clunks from the rear under hard acceleration; visible cracking or tearing around the differential mount in the boot floor.
- Fix and cost: Welded steel reinforcement plates are the established permanent fix — roughly $500–$2,000 AUD depending on severity. Inspect this area closely on any Z3 M.
Oil leaks (all models)
All M engines of this period develop oil leaks as they age. Valve cover gaskets, the oil filter housing gasket, and camshaft seals are the most common sources on both the S62 and S54. Budget $400–$900 AUD for valve cover gaskets, and factor in additional seals if maintenance has been deferred.
Recalls and safety
BMW M cars from 1998–2001 have recall and safety notice history on the Australian register. The Takata airbag recall — one of the largest in Australian automotive history — affected a wide range of BMW 3 Series and 5 Series vehicles of this era, including E46 and E39 models. Verify that any outstanding recall work has been completed before you buy. Carify has mapped recall data for this period:
You can also browse the recalls landing page or the all-models hub for broader context.
Buying a used BMW M? What to check
- Service history: Short oil change intervals — ideally every 7,500–10,000 km with quality full-synthetic oil — are critical. Long intervals are the primary driver of S54 rod bearing failure.
- Rod bearings: Ask when bearings were last replaced. On any S54 (E46 M3, late Z3 M) or high-mileage S62, no record is a significant risk flag.
- VANOS operation: Listen for a smooth idle and strong low-end pull. A lumpy idle or cold-start rattle points to VANOS work needed.
- Cooling system: Ask about the last cooling system service. Inspect the expansion tank for cracks or discolouration.
- Oil leaks: Check the engine bay and underside. Some seepage is common on aged engines; heavy leaks suggest long-deferred maintenance.
- Z3 M rear subframe: Physically inspect the boot floor around the differential mount for cracks or evidence of prior repair.
- E39 M5 throttle actuators: A test drive in Sport mode checking for limp-mode or EML lights is essential.
- Timing chain (S62): Listen for start-up rattle and ask about timing chain guide service history.
- History check: Run a VIN check or PPSR check to confirm no finance owing, no write-off history, and no odometer discrepancies.
The verdict
A well-maintained BMW M car from 1998–2001 is a genuinely rewarding purchase — among the finest driver's machines of their era, and Australia received all three significant variants. But the emphasis on well-maintained is critical. These are high-revving, complex machines with age-related failure modes that become very expensive when ignored. The S54's rod bearing risk is real and well-documented; the S62's timing chain and throttle actuators need attention; the Z3 M's rear subframe warrants close inspection; and every single one of them has a cooling system that should be refreshed if it hasn't been. Budget generously — annual running costs of several thousand dollars are realistic — and use a BMW specialist who knows these specific models. Approached with eyes open, an E39 M5, E46 M3 or Z3 M can be an outstanding modern classic.