What goes up must come down, right? From the ball Ohtani hit through the roof of the Tokyo Dome to the ebb and flow of values for blue-chip Ferraris, nothing goes up continuously forever. For fans of a certain German coupe, this spells good news, because the fall is finally happening. Values of the iconic BMW E46 M3 are returning to terra firma on online auction sites, and there could be more at play than just pandemic-induced car fever drying up.
One potential contributing factor to loss of value is that E46 M3s are expensive cars to run. We’re talking rod bearings that wear prematurely, head gaskets that pop, high-pressure VANOS predisposed to problems, and trunk floors that tear out of the car on their own accord. Oh, and that’s before we get into cooling system components that get tired, single-clutch automated manual SMG transmissions that are trainwrecks, and all the little nuisance items common to any E46. Driving an E46 M3 is a joy. Maintaining one? Well, let’s just hope you have deep pockets. With people across the globe tightening their belts, running an E46 M3 might now be unsustainable for some.
It’s also worth noting that E46 M3s aren’t hyper-rare. BMW made 56,133 coupes and 29,633 convertibles, totaling up to 85,766 cars. Add in a high initial price tag and legendary performance, and attrition isn’t the world’s biggest issue. Sure, some rare options may make one E46 M3 more valuable than another, but taking spec out of the equation, there are enough of these cars to go around.
Perhaps people have finally snapped out of it, because the market seems to have normalized. You can get a convertible in the mid-to-low teens, a driver-spec manual coupe for around $20,000, and the top of the market seems to be around $40,000. If you just looked at the numbers from late 2019 and late 2023, you’d think that absolutely nothing happened. However, everything went a bit mental over the past few years.
For the first half of 2022, the cheapest E46 M3 to sell on Bring A Trailer was a 56,000-mile silver-over-grey 2004 SMG convertible with a hit on its Carfax. This thing gaveled at $21,500, thousands of dollars more than it likely would’ve one year prior or after. Wanna see a comparable example? Check this thing out:
Sure, this silver-over-grey convertible had a few thousand more miles on the clock, with the odometer standing at 62,000 miles. However, it had a six-speed manual transmission instead of the failure-prone SMG, had a perfectly clean Carfax, it was two model years newer, and it had been with its original owner since new. That’s a whole lot of stuff that could buoy value in the same market, except by the time this sold in 2023, the market had shifted. The hammer price? $17,000.
Also returning to normal? The availability of project-spec M3s on auction sites. Throughout 2022, there were no slightly rough examples on Bring A Trailer. However, values on the handful of project examples seem to be falling close to, if not below, 2021 values. Take this questionably-altered flood title SMG coupe with an extremely obvious touch-up job on the rear bumper. In 2021 it went for $13,250.
Now, here’s a ratty but pretty functional Imola Red six-speed manual coupe with a clean Carfax that sold earlier in 2022 for $14,750. Given how gearbox selection and color really affect the value of these cars, this thing was far more in-line with what I’d expect to pay if the pandemic-induced spike in car prices never happened. Sure, it would’ve immediately needed tires and a flex disc, but getting new tires on most used performance cars is a must, and a flex disc is both cheap and incredibly easy to replace.
Upper end of the market. Let’s say we hone in on Laguna Seca Blue six-speed manual coupes. Well, an interesting pattern emerges. Unsurprisingly, rare colors like Laguna Seca Blue continue to pull a premium, but the total price tag is still down from peak. Here’s an example that hammered this year on Bring A Trailer for $28,777. Sure, it has 101,000 miles on the clock, it has a few reversible visual modifications, it isn’t quite cosmetically perfect, and its headers make it unwise to take to California, but it has a clean Carfax, the subframe mount reinforcement was done, and new paintwork is confined to the front bumper. This is a car that presents very well, and seems like it would be a hoot to own and drive.
In contrast, here’s a Laguna Seca Blue M3 that sold on Bring A Trailer in 2021. It had 144,000 miles on the clock, and was in roughly similar cosmetic condition to the car that sold in 2023. A few chips, a few scrapes under the front bumper, that sort of stuff. Like the car that sold in 2023, it rides on coilovers, albeit Fortune Auto units rather than high-quality KWs. Oh, and it gaveled for $36,251. Someone could’ve saved nearly $7,500 and got a lower-mileage car if they had just waited a couple years.
So there we are, proof that the value crash we all knew was coming is finally happening. It just goes to show how much of the collector car market is timing, and how the best approach is always to buy what you can afford, enjoy the hell out of it, and don’t worry too much about appreciation or depreciation. People who bought at the top of the market hoping their well-aged Bavarian sports coupes would continue to appreciate will likely take a bath if they have to sell in the next few years. If they miled-out there cars and squeezed out every drop of possible enjoyment, chances are they’ll look back on their ownership period fondly. If they kept them locked away with speculation as a primary goal, they’ll likely curse the car for the rest of their existence. Statistically, aside from a small handful of blue chip cars that are well out of the hands of most enthusiasts, cars are terrible investments. Buy what you love, drive it, keep it maintained, and enjoy it. Oh, and if you’ve wanted an E46 M3 for years, now’s a pretty good time to buy one.
(Photo credits: Bring A Trailer)
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As an owner of an SMG E46 M3, I still can’t understand the hate on them. The SMG and the 6MT are the same transmission. And the pump that fails is only about $1200 and 4 hrs work to replace. It’s drives like a manual when you want to and shifts, foot the floor, lightning fast when your driving aggressively. Had thought about having the 6MT conversion done but after owning it for a few years, I’ve come to really like the SMG
Correct.
Thomas isn’t wrong with the overall premise of the article, that being, the whole automotive sector is taking a huge doodoo in some cases and a real pause in others, later being better… or maybe not.
In the year 2000 this car came out. BMW sold to the public an Inline 6 with 6 ITBs, 11.5:1 compression, 8,200RPM max redline, 104bhp/L (107 in EU) with oil that was also used in all the top supercars of the time (10w60). And you think this will be a cheap car to maintain 24 years later?
This was, and still is the only car to spank the GT3 of the time (996 AND the 996.2) around the ring by a considerable margin. Only Andreas’ first car the 996.2 RS was the one to beat it and in his words “it was not like baking cakes, the CSL was a formidable competitor” (at 2x the price of the CSL no less, and the CSL was not cheap). No M3 since has known which way a GT3 went, let alone beat it.
The E46 now for all intents and purposes is a very well known quantity, surprising that the comments are so all over the place, but for everyone else you take care of the Vanos, Rods (maintenance item every 70km-100km depending on driving habits, track use, oil change intervals), and Subframe … all in that order. The rest is all refreshers with the cooling system taking top spot. Use anything else but OEM radiators at your own expense, if you want to beat OEM performance you need specialty racing applications (see PWR et al). All rubber bushings, hoses, etc need refreshing. A stock well maintained car will do wonders on the road and track and will be surprisingly on pace with sports cars of today while giving you the sort of emotion and connection the new digital crop of Dysons can never hope to measure up to… ever. This is not a car for burble tunes and downpipe and email for 450whp. 350whp will cost you two used 335i’s from kijiji, so making power in this platform is not cheap. The reward is great, and will only make sense for those that have taken the true path to greatness.
SMG is also not a bad transmission. It’s just not great. Sequential Manual Gearshift, or automated manual transmission, has to be driven as such and 99.99% of people that ordered it didn’t. Also SMG cars are the ones that suffer from the most subframe issues due to the jerky driving nature that’s initiated by the unexperienced drivers. CSL transmission parameters can be flashed for relatively cheap and you can have a much more improved experience on upshifts and definitely on downshifts.
The Competition pack, one of the best ever offered, does make the car a bit more focused. In period it was a huge value for money at some $4,000 dollars you got the CSL/ZCP steering rack, larger two piece front rotors (345mm), ZCP style 163M (not to be confused with CSL 163 that are NLA on the fronts which are wider at 8.5), special alucube trim, alcantara steering wheel/shift/ebrake boot, slightly revised spring rates, M track mode which debuted on this model (same as CSL), as well as the unlocking of OEM color Interlagos Blau (any car you see in that color is a ZCP model). Even if you dont have that on your car, you would be well surprised to see what a stock fully refreshed car is capable of. Probably the best Top 5 sports cars of all time, and definitely the best M3 ever made.
With all that, the car came alive a bit more especially towards the end of its run circa 2006 when it still bested everything in its category.
Any well kept coupe, with a 6mt, regardless of color will command a well earned price. However good cars are hard to come by, and you must know what youre getting into. If the car is in need of lots of rubber and over all refresh then it will certainly feel dated and not as sharp as it should be (which is the case for anything not just limited to the E46). If you are on the fence, and this was a poster car, buy the best one you can afford comfortably, with at least 5k USD in change for immediate maintenance items. Take your time with updating it to as new spec as you can, and you will have a great summer daily and a wonderful companion on early Sunday mornings on any road you choose to let that motorsport grade inline howl to 8k.
PS for the guy that test drove the CSL, jealous, that is surely the best M3 ever made. Arguments against are …. zero
Ugh I forgot how beautiful those cars were now that seeing them is not a daily occurrence. With the cyclical trends in fashion and design hopefully we are not too far away from E46 inspired BMWs
Seems to me prices for many sporty – type fun to drive cars are coming down from the levels we have had over the last few years.
I’m so glad I delayed my E46 M3 itch so long and got a S54 Z4M instead…. there all 6spd manual BTW so don’t have to worry about the SMG mess. CSL goodies added on from the factory, only problem is worst BMW cup holder ever.
I’m on the overpaid list, bought mid-2021, sold my ’71 Coupe deVille and had cash burning a hole in my pocket. Got a 2001 M3 convertible, stick with 66K miles, in Graphite Black.
Don’t really regret it, as it’s an amazing ride, and I was good with the price at the time. Had to do the VANOS solenoid this year, and it’s an early ’01, and ahead of the bad bearings, so hopefully many years of analog happiness still yet to deliver.
And not matter what, you’ll still lose an awful lot less in depreciation and maintenance than any M3/M4 made in the past 10 years, not to mention E46s look an awful lot better than the current crop of M cars
Your turn now, M Coupes.
If they can go back to 2011-era pricing, that’d be much appreciated.
I test drove an E46 M3 CSL, and it was ok. Given how hugely hyped these are I expected something more from driving one at road speeds.
The SMG was rubbish, but there wasn’t really anything special about the rest of the car, apart from the engine, and even then it didn’t feel that fast.
I really wanted to love it, but I didn’t. It’s probably saved me loads of money and grief.
That’s because you drove the SMG variant.
There were no manual CSLs.
Terrible gearbox aside, it still didn’t feel special.
Oof, I overlooked the “CSL” part and only read M3 lol. But regardless, try a manual E46 M3 and I think you’ll enjoy it more.
Meanwhile I’ve just been buying BMW E34’s this whole time for $1500 or less. Somehow I’m still able to find halfway decent examples in that budget, from 2019 through 2023. I’m on my 9th one now. Keep hyping up all the mediocre 3-series BMW’s while my friends and I enjoy our old 5’s for a fraction of the money.
Solution to the SMG problems: get a manual
I hope ZHPs join this trend as well.
LOL, I never understood the ZHP fanatics and laugh every time one shows up calling out ZHP in the title. Just get a full M, ZHP is not worth more than $1000 over a regular 330.
I picked up a dirt cheap (for good reason) ZHP in mid 2020 before everyone lost their minds on the value of those suckers, and have since restored it to a respectable looking, sporty/light duty track car. I have to say, it’s one of my favorite cars that I’ve owned. That said, the prices those things bring is insane. That car actually got me looking into a full E46 M around the time of the sky rocking prices…so yeah, still rocking the ZHP.
A big issue for this car is that its weight, power, and torque overlap with the also RWD, also available with manual transmission V6/turbo-4 Mustangs and Camaros that have been in production for over a decade.
I really quite like my one, I’ve been good with maintenance, and as much as value has gone up over the pandemic, it’s been depreciation free for me. But market is pretty different in Australia for these.
I think eventually they’ll go up a fair bit more, but that’s a while off (10y+), as for me the only other car similar to this is a 911, which are heaps more. This drop back down now will effectively help in the long run, as it will wipe out the ones that are already border line.
I’m glad I’m an e36 M3 fan and owner. It’s genuinely been pretty reliable and I beat the crap out of it. Plus the e36 is a sharp looking car compared to the bar of soap e46.
That said, I’ve drive e46 M3s, and it felt like a shrunken down version of an e39 M5. It wasn’t as exciting and raw as the e36 but was otherwise a very good driver. Definitely fast!
I had one new, 2001 w/ manual. It was less than I hoped it would be. Jittery ride, too heavy, the manual transmission was notchy, numb clutch (clutch delay valve). I didn’t even like the seats. I guess there’s an ass for every saddle.
Now, you too can experience emotional support, crippling debt and inflated senses of invulnerability that comes with a S54. Just think, bankruptcy is goes away after seven years! 2030 is going to be a great year to experience the warm embrace of a E90 M3.
All the clout chasers using 96 months loans to buy these have defaulted and moved on to Tesla’s.
Those Tesla leases are cheap as hell right now. As everyone knows by now they’re certainly not my thing but my buddy and his wife just leased a Model Y for the same amount as Honda offered them a CRV Hybrid lease for.
Yup. Despite being fast, Tesla’s are appliance cars.
Can confirm. Amazing daily drivers, but not very fun. You can’t disable the stability control, so even RWD ones can’t have fun in the rain or snow.
My Model 3 is the reason I got another Miata. Win-win.
Finally! But I still wouldn’t buy one. I’ve ridden in them a few times and it’s not all it’s hyped up to be. They seem to be fun cars but I think it was more nostalgia than anything that made these so expensive.
They aren’t the Ultimate Riding Machine.