The BMW M3 has been our perennial favorite ever since it was launched. While the E9X model, with it's scintillating 414hp 4.0L V8 makes it a hard package to beat, it comes at a cost as well. So if you're on a smaller budget and are looking for what many consider a superior package thanks to its lower weight and more nimble chassis, we'd strongly urge you to consider the 2001-06 BMW M3 (known by its chassis code E46).

This particular model has a number of desirable attributes that include it being gorgeous from every angle, possessing an excellent power to weight ratio of 10.3 lb/hp, it's not too heavy at 3415 lb, has a brilliant chassis, is extremely rewarding to drive, not overly expensive and has been around long enough that the aftermarket has fixes for all its bugs, and created a multitude of performance parts.

Scouring the internet, the E46 M3 is fairly plentiful and a country-wide search turned up cars ranging in price from $10,000 for high mileage '01/02, to $35000 for low mileage '04/05 models.

Maintain & Restore

When buying an E46 M3, it does have a few areas where you should pay special attention. We don't want you to think these cars a prone to faults, but we're highlighting some problems that can arise, particularly if the car has higher mileage or has been driven hard.

The first potential problems was a rod bearing issue on earlier '01-03 cars, so check the VIN to see if your car was affected and repaired under warranty.

You should also take into consideration the high-revving nature of the S54 3.2L inline-six engine. With an 8000rpm redline, you may want to check the connecting rod bearings and bolts for peace of mind.

BimmerWorld rod bearing kit

The S54 rod bearing failure was addressed by the factory but there's room for a better solution. So BimmerWorld has a treated rod bearing set and race-quality ARP hardware to address this oiling issue for cars that see the track. ($600)

You may also encounter problems with the suspension and diff bushings on high mileage cars. These are easy to repair, but be wary of the subframe fatigue, which can lead to cracking on high-mileage, hard driven or modified cars.

BMP urethane bushing kit

The kit Includes a set of 60mm urethane control arm bushings pre-pressed into the brackets in the correct orientation. This makes installation a simple bolt-in procedure, without needing to use a press to remove then refit the bushings. ($150)

TMS chassis reinforcement kit

With age, mileage and hard use the E46 chassis can develop weak points that threaten the car's integrity, so Turner Motorsport (TMS) developed reinforcement pieces for all the common weak points based on its racing experience. Anybody with an E46 M3 should consider fitting this before the problems occur. ($254)

Electrical issues are another potential problem, with ignition coil packs, alternators and various switches liable to suffer on high mileage cars. For example, the gear position switch on the SMG transmissions can fail, causing delayed shifts or failure to shift properly; but it's an easy fix for those in the know.

Bav Auto ignition coils

The core windings inside these coils from Bavarian Autosport have been modified to increase firepower and promote a faster, more efficient burn. This will increase low speed response, high RPM power and should improve fuel economy. DIY installation should take about 30min. ($270)

Regular maintenance items are also very important for this motor. Engine oil (10W60 is recommended), transmission oil and spark plugs as well as air, pollen, fuel,and oil filters should be at the top of the list. Keeping your brakes in good condition should also be a high priority for any owner.

Bav Auto Liqui Moly oil

Made in Germany and approved by BMW, Mercedes, Porsche and others, Liqui Moly's synthetic Race Tech 10W-60 oil is said to reduce friction, minimize wear and improve both fuel efficiency and performance. It's available in one- and five-liter containers. (from $10)

Bav Auto brake kits

Packaged with drilled rotors, stainless steel lines (both with a two-year warranty), Cool Carbon S/T pads, pad sensor wires, brass caliper bushings, Sta-Lube caliper grease, noise free anti-squeal compound, ATE Super brake fluid and brake rotor hold-down bolts, starting at $812 for all four corners

Tuning: Stage 1

Once your E46 M3 is fettled and ready for the road, you might want to consider some performance upgrades to enhance your vehicle's considerable talents. And with all the repair and maintenance taken care of, the fun can begin. We've selected a number of parts from respected tuners and BMW specialists, but don't have sufficient space to cover all your options. So we'd recommend you spend a few minutes on websites belonging to the bigger tuners and suppliers, such as Bavarian Autosport, BimmerWorld, BMP Design and Turner Motorsport to discover everything they have to offer for the E46.

We generally like to begin with the chassis where you can get the best bang for your buck. After strengthening the subframe, you might want to consider uprated bushings rather than factory replacements for better handling response or greater durability. Once that's done, it's time for a coilover kit and wheel alignment. Considering these cars can be up to 12 years old, new suspension components will refresh the handling and give you a more direct feel.

BMP Design rear shock mounts

These billet rear shock mounts use 60 durometer cast-in urethane bushings that allow some flexing so can be used on the street or weekend racer, without the harsh ride of solid steel mounts. ($100)

BimmerWorld Powerflex bushings

BimmerWorld carries the full line of Powerflex polyurethane bushings, including front control arm, rear trailing arm, rear subframe and sway bar bushings, plus diff housing sets. The parts are designed to allow specific rigidity required while minimizing NVH normally associated with solid bushings. (from $63)

Coilover kits

There are several options to choose from Bilstein, H&R and KW among others. We've experienced them all and each will bring positive improvements. The KW Variant 3, for example, will give you three-way adjustability for damper response as well as progressive-rate springs, and it's well-suited to track day use. ($2899.99)

Upgrading the OEM sliding calipers to fixed-piston calipers can create a big improvement in brake pedal feel and control. You can also increase the thermal capacity of the brakes, reducing high-speed fade, by upgrading to thicker, larger diameter rotors. Or you can reduce the unsprung weight by using lighter two-piece rotors. Fitting larger brakes will generally improve lap times and allow more consistent lapping thanks to this aforementioned fade resistance.

StopTech brake kits

The StopTech kits contain high quality fixed, multi-piston calipers designed to work with the M3's brake system. They can also provide two-piece AeroRotors, sport pads, stainless steel lines for better pedal feel, plus mounting hardware. Choose from front-axle only, or four-axle kits with various caliper color options (from $2195 per axle).

The stock M3 manual gearshift lever and mechanism is one of the best on the market, but it can wear out. Some drivers also prefer a shorter throw for quicker changes.

BMP quick shift

The BMP Quick Shift V2+ short shift kit is one of many available but has a heavy-duty machined steel shaft with an adjustable silicone bronze pivot ball. The lower coupling has been upgraded from the conventional bronze bushing insert to a high-grade needle bearing to reduce future wear. Additionally, the lever is billet aluminum with a vulcanized rubber damper and will accept either the late style push-on factory shift knob or early screw-on versions.

The adjustment range is up to 45% with the new billet spacer that allows greater throw adjustment by slightly raising the lever assembly to eliminate driveshaft interference. ($200)

There aren't many inexpensive engine mods for the S54 3.2L engine but you could start with a K&N panel filter in the stock air box plus engine and/or transmission software for some cheapish thrills. Properly engineered underdrive pulley kits and a cat-back exhaust system is another good way to pick up more power and responsiveness.

ESS software

Optimized ECU software is the result of many hours on the dyno, allowing exact calibration of engine parameters to allow maximum performance gains with improved drivability, without adversely affecting fuel consumption or longevity. Throttle response has been improved and the speed limiter removed. You also have the option of the stock rev limit or up to 9000rpm. Power is increased by 10-15hp when programmed for 91-octane fuel. ($695)

ESS SMG software

SMG transmission software is available both for naturally aspirated engines (stock and ESS-tuned) as well as ESS supercharged applications. It increases shift strength in 4/5/6th gears while taking the launch control to 3800rpm. ($599)

TMS underdrive pulley kit

Importantly, this kit doesn't replace the crank pulley; only the auxiliary pulleys with "stock looking" units, designed to underdrive the water pump, power steering pump and alternator to reduce parasitic losses. Adding the kit is said to be "like getting 10- free horsepower". These accessories have proved safe over years of on-track and road use. ($290)

BavAuto Scorpion exhaust

The Scorpion stainless steel system for the E46 M3 has been engineered to deliver a horsepower boost without being as loud as competitor free-flow systems. It's also TuV certified. ($800)

Lightweight forged wheels

Not only do they look spectacular, but can also improve your handling and increase wheel horsepower. There are obviously many options to choose from, such as Forgeline Motorsport wheels. For the E46 M3, they have 18 or 19" sizes in staggered or "square" sets (the latter are for track guys to allow tire rotations but will need 5mm spacers on the rear). Reducing wheel and tire weight by 4 lb can equate to 10-13whp on the dyno.

Stage 2

If you're a track enthusiast, your M3 will need to be fully adjustable to suit your driving style and track conditions. Therefore, you'll need the best suspension available. Fortunately, the cars have been extensively raced and proven by top US teams.

Coilover suspension

Again, there are several high-end coilover kits to choose from. Look at kits from Bilstein and H&R plus the three-way adjustable KW Suspension Clubsport kit. It uses race-spec top mounts, linear spring rates, tuned valving, large diameter internal piston rods as well as independently adjustable rebound and compression damping. ($3529.99)

TMS camber/caster plates

The stock strut mounts only allow about 0.5° camber adjustment but no caster alteration. Since this isn't enough for track use, Turner Motorsport manufactures its own camber/caster plates designed for street and track use. They allow -1.2° to -3.85° of adjustment. The plates also permit the necessary strut angle for caster set up, and use urethane top bushings for a smoother ride than solid track units. ($450)

BimmerWorld radiator & oil cooler

Working with C&R Racing, BimmerWorld has a radiator and dual-pass oil cooler available to keep your M3 cool on the track. The radiator uses aluminum end-tanks and a true racing core, which makes the real difference. The oil cooler is the only dual-pass unit on the market with a complex twin-core assembly. They can be used individually with stock components, or fitted as a combined stack for the ultimate cooling solution. ($900, $880)

StopTech Brake Kits

There are several kits available, depending on your budget and needs. All come with forged calipers in a choice of finish, two-piece AeroRotors, sport pads, stainless lines, hardware and brackets. ($2945-3945)

TMS rear camber arms

A lowered car doesn't have much adjustment in the stock camber arms, so if you're looking for increased camber adjustment, these stronger yet lightweight components are the solution. They come with either solid rod ends for track use, or rubber bushing for street/track use. ($300)

TMS rear bushings

TMS produces its own upper rear control arm inner bushing and rear trailing arm monoball bushings to limit rear control arm movement relative to the subframe. These solid bushings are lightweight and strong, designed to distribute the load evenly throughout the casing, flange and bearing. ($165, $280)

BMP exhaust

BMP Design has a new Sound Speed stainless steel exhaust manufactured in Italy. Intended for race or street use, it includes headers, race cats, "S" pipes, "X" pipes and sport mufflers. All have laser-cut flanges and were designed for maximum power. They're also compatible with the OE exhaust and mounting points, assuring a good fit. ($TBA)

BimmerWorld exhaust & diffuser

This cat-back exhaust is available in both race and street versions with 3.5" stainless tubing. It has multiple tailpipe configurations for the stock rear bumper, a turndown option for track guys, or BimmerWorld's own carbon fiber diffuser. The diffuser extends back to create additional downforce. (from $825, $999)

Stage 3+

For really big power, why not try an ESS supercharger kit once you've uprated your suspension and brakes. The ESS VT2-550 (Gen 2) supercharger conversion can deliver a tire-shredding 550hp and retails at $8495.

ESS Tuning
1900 W. Chandler Blvd. Suite #15-242
AZ  85224
KW Suspension
1075 North Avenue
CA  93657
Bavarian Autosport
275 Constitution Ave.
NH  03801
Turner Motorsport
16 South Hunt Rd
MA  01913
Forgeline Forged Alloy Wheels
3578 South Kettering
OH  45439
1805 S. Wilmington Ave.
CA  90220
4085 Pepperell Way
VA  24084
H&R Suspension
Bilstein Suspension
14102 Stowe Drive
CA  92064
BMP Design
3208 Park Center Dr
TX  75701
By Doug Neilson
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