As car investors and enthusiasts we’re all well aware of how prices of the original BMW M3, the E30, have surged in recent years. Rarity, pedigree, and nostalgia have all combined to dictate asking prices of £70k plus, which, when you look at it objectively, is absolutely absurd. But can we expect to see prices of later M3 models heading northwards as well? After the E30, and as we entered the nineties, the E36 M3 was introduced, and today we’re already starting to see some crazy price tags for clean examples of those. At the turn of the century BMW acquainted us with their third iteration, the E46 M3. It’s incomprehensible to think that the E46 could ever reach the heights we’re seeing from the E30, simply due to the difference in the numbers produced, but now that prices start at under £10k for the E46, would it be wise to snap one up in the hope of seeing a more modest return?
BMW E46 M3 Engine
E46 M3 Engine Bay
The E46 M3 was launched with a 3.2 litre straight six producing 343bhp, and achieving 0-60 in just a smidge over five seconds. The twin dual exhausts and flared wheel arches showed that the M3 meant business, but in a somewhat subtle and perhaps more refined manner than we see with some of today’s equivalents. As with all M cars, you knew you were going to be in for a treat once you got it out on the open road. The effortless acceleration and sublime handling had motoring journalists salivating, with many proclaiming it to be the ‘best M3 yet’. A bold statement, given the E30’s aforementioned prowess.
Its production run lasted from 2000 until 2006 when it was replaced by the controversial V8 powered E90, and during that time 85,000 E46 M3s were built. This was around 14,000 more than the E36 M3 that came before it, and over five times more than the E30 M3 from the eighties. The E46 was incredibly popular from day one, and with its timeless looks, continues to be today. A quick check on our favourite second-hand car sales sites show hundreds up for sale, with prices starting at an incredible £6k. Excellent, an affordable M car, time to get the chequebook out then. But hang on, we should know by now that in the world of car investment, if something sounds too good to be true, it usually is. If you’re seriously looking at one of these for investment purposes, you’re going to need to look a little harder, and dig a little deeper. Whilst it is very probable that this will one day be considered a classic, the E46 M3 is now between 15 and 20 years old. We like to call this the ‘minefield phase’ here at The Car Investor. A significant proportion of these cars will inevitably have fallen into the hands of people who were lured in by the relatively cheap asking price, and then prioritised buying new rims and adding random plastic crap to the bodywork, rather than splashing out on the maintenance an M car needs to survive into its later years. The same people would now love to sell you their M3 at a bargain rate.
So how do you avoid getting burnt? A good way to narrow your search would be to take into consideration some of the factors that car investors will be looking for in years to come. Firstly, the gearbox. The E46 M3 came with a choice of two; a six-speed manual, and the second generation of their sequential manual gearbox (SMG II). Whilst it is still technically the same gearbox, it only has two pedals and gears are changed by a pump linked up to the car’s steering wheel paddles. The former is much preferred by investors, and given the choice we’d pick the manual too. However, that’s not to say it’s to everyone’s taste; we’re aware of a number of enthusiasts who enjoy the SMG version just as much, despite what you’ll read online.
Modified BMW E46 M3
Many E46 M3s were modified
Another consideration needs to be whether you go for a coupe or a convertible. Whilst you can show off a bit more in the convertibles, and they’re far more fun in the summer, it’s well known that investors will generally prefer the thoroughbred, more stable coupe version of any sports car.
Mileage and service history are always important factors when purchasing a used car, but are even more relevant here. The E46 3 Series was a great motorway cruiser, and despite its sportier ride the M3 was too. You’ll come across many examples that have over 150k miles on the clock, and whilst the E46 is more than capable of doing well over 200k miles if it’s been maintained, it does mean that you’ll need to be even more thorough in your paperwork checks. M cars are not cheap to run, and if the necessary servicing hasn’t been carried out at a certified BMW service station throughout its lifetime, you’re going to find yourself with a pretty big hole in your pocket when you do have to get some work done.
Once you’ve considered these factors and whittled down your search, you’ll find that actually manual, low-mileage, well serviced coupes aren’t so common, and you’re now starting your search at 10k rather than six. So given these factors, would we want to invest in an E46 M3 today?
Exclusivity
As we’ve mentioned, there were plenty built and plenty remain on the roads today. But that’s not to say it will always be that way. Over the next few years numbers will start dropping as the poorer examples are parted out, crashed or sadly left to rot, and it will become harder to find the manual coupes that we’ve touted as being the most popular models amongst future investors.
Looks
Many consider this era to be the pinnacle of styling in BMW’s recent history. The E46 M3 didn’t have the brash styling that today’s M cars have, and is rather more simplistic and refined. But we like that. In our opinion here at The Car Investor, the E46 is simply one of the best looking 3 Series ever built.
Price When New
When it reached the UK in 2001 it cost nearly £40k from new, and was £9k more than the next in its class, the 330ci. Expensive, but not extortionate in comparison to some of the cars we review here, which goes some way to explaining why it was so popular from day one.
Running Costs
It’s no secret that M cars are more expensive to run than your average BMW, and this is no exception. It does, however, come from a time when cars were simpler. Sure, the E46 had its fair share of electronics, but it was nothing on today’s touch-screen generation. The infamous sub-frame issue is the one to do your research on before buying, as this could set you back thousands. MPG will be in the mid-20s, and you’ll be paying upwards of £500 for a full service.
Cult Following
M cars in general have one of the biggest followings of all, and the E46 M3 is a favourite amongst fans. There are various online forums dedicated to the E46 specifically, and the BMW Car Club will look after you at classic car events.
Time to Buy?
In recent years these M3s have been cheap enough to ensure that a fair few have fallen into the wrong hands. In the coming years we’ll move past that stage, and it means that good, clean examples will start to become harder to find. If history tells us anything, then now would be an ideal time to pick up a bargain, as long as it’s up to investment standard.
Verdict
We love the E46 M3, and think it’s one of BMW’s all-time greats. If you’re looking to invest in one then spend a bit more and pick the specification we’ve detailed or similar, and it will pay off in the long-run. That said, this is still absolutely capable of being a daily-driver, so if SMG is your thing then don’t let us put you off… you’ll still have one hell of a car on your driveway. Before long these will be out of many people’s reach, so if you’ve always wanted one then it would be wise to act now before it’s too late. We love it here at The Car Investor, and would absolutely invest today.
