1992-1998

Thanks to the E30, the two-door heritage of the 2002 and 320i had been transcended, and the 3 Series was now a full line of compact coupes, sedans and convertibles with serious sporting pretensions. It was also the envy of the industry, as pretenders as suspect as the Cadillac Cimarron and as legitimate as the Audi 4000 Quattro tried and failed to reproduce BMW's 3 Series magic. Replacing a product as successful as the E30 with anything but an evolutionary development was bound to be tricky and fraught with commercial danger.

The replacement for the E30, code-named E36, was the first clear and obvious break from the proportions and styling details established by the 2002. In practically every dimension, the E36 four-door was slightly larger than the E30. At 106.3 inches, its wheelbase stretched 5.1 inches longer than the E30's, and the car was slightly more than 4 inches longer overall. This extra size was put to good use with increased passenger room, a substantially stiffer structure and a perfect 50/50 front-to-rear weight distribution. Yet the wedge-shaped body of the E36 kept it from looking much larger than the bolt-upright E30, and its sleek detailing both improved aerodynamics and reduced wind noise.

While the E36's front suspension retained its traditional MacPherson strut design, engineers made the rear suspension more sophisticated than ever before. Called the "Z-axle," the new rear end was a multilink system as opposed to semi-trailing arms used in previous 3s. It offered much better camber-change characteristics throughout its travel. Mounted to its own subframe, the Z-axle wasn't cheap, but it worked spectacularly well and would become the prototype for rear suspensions in subsequent BMWs, including the 5 and 7 Series. While mostly new in design, other elements of the E36's chassis were familiar, such as the rack-and-pinion steering, four-wheel disc brakes and antilock brakes.

A new DOHC 24-valve aluminum head bumped the 325i's output to a robust 189 hp -- so robust, in fact, that the first five-speed 325i tested by Car and Driver bolted to 60 mph in just 6.9 seconds and ran the quarter-mile in 15.3 seconds at 91 mph. That's just as quick as the original M3 to 60, and just a tenth of a second behind it in the quarter-mile -- and this was the mainstream volume-production four-door. By the 1993 model year, the M50 engine would gain BMW's VANOS variable valve timing system, and consequently a sweeter, fatter torque curve.

The four-cylinder engine in the 318i also used a four-valve cylinder head to make 138 hp. But U.S. BMW buyers were increasingly opting for six-cylinder engines in their cars, and throughout the E36's production cycle, fewer and fewer fours were sold.

While the four-door E36 debuted in the fall of 1991 as a 1992 model, the two-door coupe didn't appear until 1993, while the new convertible was delayed until 1994. Unlike previous 3 Series two-doors, the E36 version wasn't an upright sedan with two fewer doors, but an altogether rakish coupe. The front windshield was more steeply laid back than in the sedan, as was the rear window, and from the A-pillar back the 325is coupe was a completely different car. But it looked a lot like the sedan anyhow, a family resemblance that was comforting to most buyers and disappointing to some critics who thought BMW could have been more radical with the coupe.

BMW wouldn't let the U.S. have the wagon model of the E36 when it went on sale in Europe during 1995, but it did bring the hatchback 318ti to North America during that model year. With a chopped tail and the semi-trailing arm rear suspension from the E30 aboard, the 318ti was intended to extend the 3 Series appeal downmarket and attract entry-level buyers. However, the only engine available was the 138-hp 1.8-liter four and the interior decor was rather austere in comparison to the increasingly plush innards of other 3 Series cars. Never fully accepted by many BMW enthusiasts, the 318ti would attract relatively few U.S. buyers before leaving production after the 1999 model year.

For the 1996 model year, the 2.5-liter engine in the 325i and 325iS was replaced by a new 2.8-liter inline-6, and the 325i and 325is were accordingly rechristened 328i and 328is. Horsepower jumped a bit to 190, and peak torque production swelled from 181 lb-ft at 4,200 rpm to 207 lb-ft at 3,950 rpm. In 1998, a 168-hp 2.5-liter version of the inline-6 was offered in the coupe and convertible to create, counter-intuitively, the 323i convertible and 323is coupe. No one has yet come up with a convincing explanation for BMW's decision not to call them 325s.

Of course, the star of the E36 line in enthusiasts' eyes was the M3. Hitting the market for 1995 with a thunderclap of exceeded expectations, the E36 M3 two-door coupe wasn't the narrowly focused track car the E30 version was, but rather an exceptional road machine with a flexible engine and an imperturbable chassis. The U.S. M3 was equipped with a bored-and-stroked version of the 325i's inline-6. This 3.0-liter had 240 hp and 225 lb-ft of torque at its disposal, which it deployed in an amazingly refined, yet generous fashion. European M3s got a 282-hp version of the same engine, but it was peakier, with a less hearty torque curve.

To say that reviewers were enthused about the new M3 would be a severe understatement. They raved about the suspension tuning, they blathered on about how perfectly dressed the car was with its tasteful ground effects, and they nearly plotzed when describing the interior's design and execution. Oh, yeah — and it was fast. Car and Driver's first E36 M3 rocketed to 60 in just 5.6 seconds and covered the quarter-mile in 14.3 seconds at 98 mph. That's a full 1.3 seconds quicker to 60 than the E30 M3 tested by the same magazine and nearly a second quicker in the quarter-mile -- with everyday livability that the peaky E30 M3 could never approach.

So successful was the E36 M3 that spin-offs appeared quickly. For racers, BMW introduced the M3 Lightweight in 1995 with — you guessed it — reduced weight (about 200 pounds less) for competition. Though they lacked amenities like air-conditioning, a radio and a backseat, and their narrow focus compromised everyday livability and performance, the 85 Lightweights brought to America by BMW sold out quickly.

The M3 Evolution appeared as a 1996 model, and nominal engine displacement grew from 3.0 liters to 3.2. In Europe, that meant output now stood at an astounding 321 hp at a screaming 7,400 rpm. In America, with slightly different bore and stroke dimensions, hp sadly remained at 240, although peak torque output ballooned to 236 lb-ft at a mere 3,800 rpm.

In 1997, for the first time ever, the M3 was offered as a four-door and with a five-speed automatic transmission. Motor Trend tested a manual-equipped four-door M3 and made it to 60 mph in just 5.5 seconds.

The M3 was also offered as a convertible for 1998, but by this point the E36 was clearly coming to the end of its life. Many wondered how BMW could possibly improve upon this iconic car.