BMW E46 M3 and E39 M5 As Appreciating Classics

Left: E46 BMW M3 | Right: E39 BMW M5

Over the course of the past market cycle, the classic car market has done incredibly well. For evidence, take a look at the chart below showing the blue chip classic car index i.e. an index based on cars traditionally considered to be classics, stuff like the gullwing Mercedes 300SL and the 60s Ferrari 250GTO.

As you can see, the market really grew in 2014–15 and has since softened a little in 2018–20. An interesting new trend is that a lot of future classics have a shorter depreciation cycle, bottom out at a higher value and spend less time bottomed out than they have in the past. This is especially apparent in the supercar market, where the tight supply and wide range of “special editions” have resulted in a lot of today’s supercars beginning their long road of appreciation from the moment they leave the showroom floor – brave new world.

Taking a step back into the boujee but slightly less boujee world of old BMW M cars, I’d like to focus this article on looking at the BMW E46 M3 and E39 M5. Both of these cars have improved significantly on their respective predecessors and are fan favorites. They were both made in large numbers so the fact that they’re appreciating despite the oldest ones just turning 20 years old as of the writing of this article is really impressive. Most cars of that age, produced in those quantities, can barely pull mid 4 figures, whereas a facelifted E46 M3 and E39 M5 in good condition will set you back around $28000 and $31000 respectively. A few years ago, both of those numbers were less than half.

There are many possible explanations as to why these values have grown so rapidly: a hype wave around all German high performance cars, would be Porsche buyers being priced out of old 911s, being the halo cars for regular E46/E39 owners, etc. Regardless, of what has led to the quick transition from bargain M-car to modern classic, both cars are still at the beginning of their appreciation curve. In this study I wanted to graph the E46/E39 alongside some data for past M3/M5 models to see how much room there is for growth.

Timeline of BMW M3 and M5 Models

Looking at the graphs, there are a few interesting takeaways:

1. The E30 and E28 are firmly in modern classic territory, with 16584 and 2241 produced respectively. When compared to the blue chip chart, neither car experienced any growth back in 2009, however their quick growth in 2014–2016 coincided with the growth of the classic car market overall. Much like the blue chip index, the E28/E30 have since stabilized and will probably continue tracking the index pretty closely.
2. Unsurprisingly, there is a lag period before the newer cars started appreciating. What is surprising, however, is that the newer E46/E39 generation started appreciating earlier and at a faster rate than the older and rarer E36/E34 generation. Production numbers – E36: 29042 | E34: 12254 | E46: 84383 | E39: 20482. A possible explanation for this is that the E34/E36 generation was a bit of a flop in the United States. In the US the E34 was sold from 1991 to 1993 and had the lower output 3.6 liter engine of the pre-facelift models, which some claim feels slower than the E28 that came before it. The US spec E36 was also down on power due to emissions regulations, powered by the S52 engine which only made 240hp compared to the 315hp S50 engine found in the facelifted European models.
3. The E30 stabilized at 1.5x the price of the E28 despite the E28 being 7 times rarer. Both cars are special, but I think this goes to show that racing pedigree and wide appeal within the BMW community can more than make up for the high production numbers.

So where does this leave us? Overall, I think that there is still plenty of room for stock, well maintained E46/E39 cars to appreciate in value. The E30 M3 and aircooled Porsche 911s set an important precedent, showing that certain models of cars can appreciate immensely despite their high production numbers. The E46/E39 generation M3/M5 are seen as great cars, with many considering the E39 M5 the best M5 model of all. It has only been 4 years since either of the cars really started appreciating in value and so far the growth has been slow and steady. Eventually, I believe that the E39 M5 will outperform the E28, setting the high bar for classic M5 values. The E46 M3 will probably close the gap on the E30 M3, but I think that the lack of racing pedigree in addition to the future appreciation of the E92 M3 that came after will prevent the E46 from rising above the E30 in value anytime soon.