Old, but still amazing.
Depending on what you're looking for, an E34 can be an amazing performer without much investment.
Fair Warning: I am an E34 fanatic. I always have been since their introduction in 1989 here in the States.
Let's not get off on the wrong foot, not all E34s were created equally. In fact, I have, for many years felt that the first two production years '89 & '90 were produced on a different planet. These yearly years seem to lack refinement and there are common problems that can essentially make the car not worth consideration. These early cars feel much more like the E28 5-Series. The heater blower resister "sword" is expensive and you have to disassemble 60% of the car to get to it. The interiors were sort of bland, and the electrical system is wonky.
Until (if I recall correctly) 1991 the E34 525i was powered by the same lack-luster engine stuck into the E30 325i, and while it is a strait 6 BMW engine, it is underwhelming in the 5-Series. Yes, before the M20 fanboys start burning me in effigy, I realize they can be made to perform well with custom rebuilds and turbos. But... it has a timing belt, not a chain and they simply don't live up to the perception of the bullet-proof nature of 6 cylinder BMW engines.
The early, small BMW Straight 6 in a 525i.
No E34 article can be complete without mentioning the hand-massaged E34 M5. Unfortunately the E34 M5 is in no way Cheap. They're not cheap to buy, they are not cheap to maintain. However, they are a thing of beauty and when running properly they are outstanding super saloons.
A 1991 M5 with the Type 1 Turbine Wheels. No those aren't white stripes on the tires.
We're going to look at a couple of E34s that with a few modifications and some maintenance will offer a long lasting, excellent performer that will shock drivers of other "sports" cars.
The first one is the 1991-1992 525i with the M50 2.5 Liter 24 valve Non-Vanos engine. Yes, it's a mouthful, and unlike VTEC Fanboys, I prefer not having variable valve timing. VANOS isn't a bad thing, as long as it is rebuilt or incredibly well maintained.
Non-vanos M50B25, no VANOS hump on the intake side of the head.
These M50 powered E34s are cheap as chips, and it is very easy to find them with the manual 5-speed transmission. Since the M50 is the basis for the E36 M3 engine the S50, it is also very easy to find things like performance clutch kits, lightened flywheels, and power adders.
My last 1991 525i 5-Speed had well over 200K miles on an M50 engine which had a Mosselman manifold with a T4 Garrett Turbo added, along with an air to air intercooler and rising rate fuel pressure regulator. The turbo kit was compact and easily fit in the E34 and was locked down at 7psi of boost pressure. Since the engine was unmolested, that is 7psi of boost stuffed into a cylinder with slightly over 10:1 compression ratio the boost was dramatic. I never bothered to put the car on a dyno, but on the interstate the car could be left in 5th gear and pass or even climb significant hills without down shifting.
Turbo manifolds for these cars are readily available for top or bottom mount, and as long as you take time to find bargains these cars can be turbocharged for around $3000, and you can easily surpass Stock M3 performance in these well balanced sedans. There are also hundreds, if not thousands of performance parts to bump the overall performance off the chart.
My 1991 525i Turbo 5-Speed, those are 18" Rondell Type 58 staggered 8.5" Front 10" Rear Wheels. Those 275s on the rear were definitely needed.
The 540i M-Sport Interior.
I bought this car for a whopping $2500 with the turbo system already installed. I installed the wheels, Eibach Pro springs, and Bilstein Sport struts and shocks. I installed a 540i Sport interior, and by the time I was done, I was around $5000 into the car and it was seriously one of the best handling sedans I have ever owned, and it had plenty of go as well.
I've never been a fan of high revving engines. I prefer the low rev torque of big motors. So when I discovered significant rust on the above 525i, I found an absurdly low mile 1991 535i 5-Speed. I paid more for the 1991 535i, because it was nearly flawless and had barely over 70K miles on the odometer. After $4000 cash changed hands, I was the proud owner of one of the best, most long lived engines BMW ever produced. The M30B35.
1991 535i 5-Speed Granitsilber over light silver leather interior.
Naturally, I would have liked to have more power out of this big heavy 3.5 liter 12 Valve straight 6, but I could not bring myself to modify the engine with such low miles on it.
M30B35 "Big Six"
However because I have turbocharged the M30 engine before, I was in possession of a Turbo Charging Dynamics turbo manifold and a Car-Tech turbo plumbing set, as well as a Rotomaster Turbo and essentially everything required to take this 209 Horsepower 3.5 Liter to nearly 300 horsepower at conservative boost. But it isn't all about horsepower, the torque these monsters produce when boosted, is nothing short of scary.
But, so much modification pushes a boosted 535i out of Cheap car territory. Regardless of how conservative the turbo system, it isn't OEM, and it is going to raise the cost of ownership significantly. Mostly due to speeding tickets, but still...
The other E34 is slightly more rare, but more satisfying in several ways.
1994 540i 6-Speed, notice the ducts in the lower bumper spoiler, those are functional brake cooling ducts, only on 1994 540i cars.
The 540i 6-Speed was only marginally slower than the M5, but be careful, it is easy to mistake the smaller 3.0 liter V8 in the 530i E34 for the larger 4.0 liter V8 in the 540i. Some guys have actually removed the 5-Speed manual behind the 3.0 Liter V8 and replaced it with the 6-Speed manual. The 3.0 V8 was a fuel gobbling gutless engine with less performance than the 3.5 Straight Six, while using more fuel.
4.0 Liter Non-Vanos 540i V8, the M60B40, with the strange remote mounted brake booster.
While there aren't a lot of performance modifications available for the M60B40 engine, not much is required. When coupled to the buttery smooth 6-Speed manual transmission, these cars eat up interstate miles, and have plenty of go when needed.
That being said, there were some problems with this M60B40 engine. There is the Nikasil and Alusil cylinder liners and there is no way to tell if the car you're buying has Nikasil or Alusil cylinder liners. Of course, the most obvious sign is if the engine is running, or if it is smoking and has compression problems. The high sulphur content in American gasoline killed most of the Nikasil engines within 80K miles. There was a recall, and most of the problematic cars were repaired under this recall.
If it runs well, and the transmission shifts smooth, it's going to be a fair car. Handling is probably the cheapest modification with the biggest payoff. These things can handle amazingly, and still ride comfortably.
There are some bolt-on power adders, like superchargers that can make some obscene power, but again the cost of ownership is going to rise exponentially.
I'm not promising a rose garden, but careful inspection and a willingness to invest in routine maintenance will cure most of the following cons.
Issues to be aware of: This is not a complete list, just some of the most common.
Avoid automatics. Believe me, when I say I'm not an anti-automatic guy. I love the 5-speed AMG automatic, but all of the automatics in the BMW 5-series are atrocious. The BMW 5 and 6 Speed manuals are infinitely better.
The "Death Shake". E34 front suspensions are frail and when the bushings fail in the control arms, the car will develop an oscillation in the steering assembly that is dangerous and scary. Some mechanics not familiar with the E34 will diagnose this as warped rotors, or bent wheels, but it is not either of these problems. Plan on spending about $300 on parts to replace all the control arms, drag link, tie rods, pitman arm, etc. While you're at it, if you're planning on lowering the car, go ahead and replace all the rear bushings as well. The total bill on doing all this to my 525i Turbo was about $1000 including labor. Keep in mind that your bushings may be worn out, but as long as the original wheel and tire combination are installed, and the car is aligned well, you'll never notice the "Death Shake". However even doing a +1 in tire size will make this problem show itself.
M60B40 Timing Chain Guides. This is not cheap to fix. It is probably one of the biggest killers of the M60 engine. If you're handy and don't mind turning wrenches, the new timing chain guides are an improved design, and will significantly improve how your M60 runs. Expect around $1500-$2000 if you take the job to an independent repair shop.
Guibo a.k.a. Flex Disc. This isn't a difficult repair, and a new flex disc is about $60 for a quality unit, but when they start to go bad, you'll get a vibration at speed that seems to come from the center of the car, easily felt through the gear lever. While you're at it, go ahead and replace the center carrier bearing. Just be certain that the driveshaft is kept in time, and aligned properly when reinstalled.
Cooling system. Plastic radiator end tanks, and fan clutches as well as some other less than stellar cooling system components fail alarmingly quickly and can do in a spectacular fashion.
Motor & Transmission mounts. The hydraulic engine mounts split, leak and allow the engine to move around. Actually when these mounts fail, the cooling fan can impact the fan shroud, causing the fan to explode blowing plastic shrapnel through the radiator, hoses or air intake components. Bad transmission mounts will make shifts feel sloppy and the shift lever will move a lot.
Pentosin fluid. The power steering system on these V8 cars, use the equivalent of cold pressed spotted owl juice with a deconstructed dolphin foam on top with a heavy coating of truffles and gold leaf. It's hard to find, expensive and all of them leak. The pumps are expensive, the hoses are also none-too-cheap and you have to be a circus contortionist to change them.
Brake fluid and brakes. BMW, since God was a child, have required a brake fluid change every 30K-40K miles. The brake fluid, somehow absorbs water and contaminates and turns to sludge, and if left unchanged for too long the calipers will begin to seize, rotors warp, and you'll have to carry an anchor to slow down.
With a little bit of routine maintenance and starting by getting an E34 back to Stage 0, a good E34 is a car that feels modern enough to compete with newer cars, but offers a lot more than your average Camry or Honda in a rewarding driving experience.