BMW borrowed the straight-six engine from the M3 for the Z3 M Coupe, keeping costs manageable for its new performance model. Earlier Z3 M Coupes use the 321hp S50 engine from the E36 M3, complete with five-speed manual gearbox as the M3's six-speeder was too large to fit into the Z3 transmission tunnel. BMW did not offer the M Coupe with the SMG sequential manual 'box that was an option for the M3.
In February 2001, the S50 engine was replaced by the S54 motor from the E46 M3 but sticking with the five-speed manual gearbox. The new engine was a development of the original unit and offered up 4hp more at 325hp at 7,400rpm, the same peak as the S50 engine. Torque also increased by a small amount, going from 258lb ft at 3,250rpm with the earlier engine to 261lb ft at 4,900rpm with the later version. With 321hp, the Z3 M Coupe covers 0-62mph in 5.2 seconds, while the later 325hp model reduced this to 5.1 seconds, both with an electronically limited top speed of 155mph.
Although both engines have a 3.2-litre displacement, they have different bore and stroke dimensions. The S50 is 86.4mm x 91.0mm for a capacity of 3,201cc, while the S54 changed to 87.0mm x 91.0mm to give a 3,246cc capacity. The biggest difference between the engines, however, is the way they deliver their power. For some, the rawer experience of the earlier engine is what the Z3 M Coupe is all about. While the difference in torque figures is minimal on paper, the reality on the road is the earlier car has much less mid-range shove and needs to be revved harder to give its best. The S54 engine gained a drive-by-wire throttle that helped to smooth out power delivery and its greater mid-range torque makes the later car a more relaxed drive when not being pushed hard.
Both engines can take plenty of hard use on road and track, but careful servicing is needed to keep them in top condition. Valve clearances are essential for the clean running of both motors, though some mechanics ignore this job due to the time it takes to check and correct any slop. Maladjusted valve clearances will be obvious by a ticking sound from the top of the engine at low, constant revs. It's not a catastrophic problem, but it will take time and money for an experienced specialist to put right, so budget for this if you hear any untoward noises.
BMW's infamous double VANOS variable valve timing is also a known weak spot with both S50 and S54 engines, though it tends to affect the earlier unit more often. In the worst cases, the engine will sound very rough and be noticeably down on power.
More of a worry with the S54 engine are the bearing shells, which was a noted problem with the E46 M3. BMW replaced a significant number of these engines under warranty, using uprated shells to cure the problem. A 400rpm lower rev limit for the S54 engine in the M Coupe compared with the M3 means it's less likely to occur in the Z3, but it will cost at least £600 to replace the shells or, if they do fail, will require a new engine.
Routine servicing is dictated by BMW's variable service indicator, but reckon on 7,000-mile intervals for the S50 engine and 11,000 miles between halts for the S54 engine. Both require a regime of Inspection 1 service, intermediate oil service, then an Inspection 2 service followed by another oil service before starting the routine over again.
The gear lever can become sloppy on higher mileage cars as the spring that returns the lever to the centre of the gait weakens. It results in a lifeless feel to the shift and is awkward to get at, making this relatively simple fix time consuming and expensive.
A much simpler problem to cure is a stretched throttle cable on the S50 engine, spotted by a sticky pedal action. If worn and stretched, the cable will not let the engine deliver full power, but it's quick, easy and cheap to replace the cable. BMW switched to a drive-by-wire throttle for the S54 engine, eliminating this fault.
The clutch's hydraulic pipe can also expand with high under-bonnet temperatures, making it hard to select first or reverse gears. Many owners solve this with a braided hose and it's a desirable upgrade to look for. Other upgrades to the Z3 M Coupe's mechanical package are purely down to personal taste. Shorter ratio differentials improve acceleration but impact on everyday usability, while engine tuning offers few rewards as both motors are already at their upper limit of safe available power. However, a new airbox is a common modification to give the engine a better induction sound, while aftermarket exhausts also offer a fruitier note but little in the way of added power.
