By on June 16, 2011

Danny writes:

Dear Sajeev and Steve,

This is not necessarily a purchase conundrum, but I hope that you’ll help me anyway. I’m currently the owner of a lovely, well-kept 1998 BMW 323is Coupe (E36) that comes very close to fulfilling every automotive need of a frugal 24-year old single guy living in a big city—it looks good, it’s a blast to drive, it’s economical to run, and it’s pretty comfy to boot.

I picked it up about a year ago for just over 4 grand, and put about $1900 into it (a new set of Yokos and the replacement of a troublesome driveshaft). I’d love to keep the car into old age (it turned 130k on the clock yesterday), but two things give me pause. One: as much as I love the car, I don’t know if keeping it around will be worth the cost of upkeep (I’m mechanically savvy, but my “garage” is a cold pad of publicly-owned asphalt on a city street). Two: in all likelihood, I will be leaving my current city to start graduate school this fall (and will have no need for a car there).

I would hate to get rid of it—it’s been a joy to own and drive, and I know that if I sell it now, I’ll never be able to make back the money I put into it. I could conceivably leave it with a family member, and resume our relationship after I graduate, but that might not be worth the hassle. So what’s a fella to do?

Sajeev Answers:

There’s no doubt about it, E36s are sweet and you aren’t keeping yours.  No matter when you sell, you’ll never get your “investment” back from it. So go ahead and do it now, considering the time value of money and your needs in college. The only way I see things differently is if you answer these questions with a yes:

Will you move on, grow up, progress as a human being and regret not having this car around as a future project? Will you piss away far too much money finding another version of your true love a decade (or more) from now? Are you as nuts as me with my Fox Body Fords?

Steve Answers:

This is more of a coin flip. You need to first figure out what your family is willing to do. Would they be willing to drive it once every couple weeks for perhaps 20 miles or so? The cost of insuring this vehicle will go down dramatically if you arrange to have a low mileage policy with your insurance company. I know that USAA does this and I’m sure others do so as well. This is what I did when I flew around the country liquidating vehicles and it worked out.

I would estimate your costs may run right around the $1500 range if you have it driven on occasion. Storing it on blocks would be a lot less. But you have to find a place for that. Not an easy thing to do if you live in a county or city that prohibits it. I would ask yourself a simple question if the storing option isn’t available,. Am I willing to spend $65 a month for the next two years to keep this car? That’s a question only you can answer.

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20 Comments on “New or Used: A Flip of the E36 Coin...”

  • avatar

    Depends on how much you love the car and how much you’d hate to sell it. If you only hate to sell it because you’re going to lose your investment and not because you love the car very much then you need to go ahead and sell it. Also keep in mind, if you don’t drive it for several years, you could very well fall out of love with it. This has occasionally happened with me and an older truck I own. On the other hand, if you truly love the car, hold on to it. There’s a reason they say “they don’t build ’em like they used to” and it isn’t usually due to the quality build of “back in the day.” I could buy a truck not that is in almost every measurable way superior to my GMC, but it just wouldn’t be the same.

    • 0 avatar

      My 1998 328i sedan has been the most reliable and fun to drive cars I’ve owned. Bought it six years ago from the original owner with 54k miles for 1/3 MSRP. Now has 106k miles and still looks and drive like a new car. 21 mpg around town and 32 mpg on road trips (averaging 80+ mph). Only oil changes, brakes and tires. Keep it!

  • avatar

    I left my 325 at my parents house in Virginia while I lived in Manhattan for 3 years. My father had a newer one, so he had no interest in driving it and my mother doesn’t drive cars with manual transmissions. IIRC, it still worked the first time I visited, after about 6 months. The following year it was dead but a new battery revived it. When I left NYC, I had it towed to a BMW specialist a week before I was due to arrive in Virginia, on my way to California. $3,800 and almost a month later, I was on my way to California. When I got there, I spent $800 two weeks in a row. First to go was the driveshaft. The next week, it was a new alternator and starter. I fell in love with that car when I first saw it on the lot. After having it for several years, I made an emotional rather than rational decision to keep it for when I inevitably got sick of NYC again. After the repairs in California, I actually got 4 years of use out of it before spending any other big sums on it, then sold it for $3,250. I can rationalize the amount I spent on it for the years I got out of it. The alternative would have been to write a check for an E46 when I left NYC, which experience has shown wouldn’t have been a good choice.

    • 0 avatar
      Sam P

      “The alternative would have been to write a check for an E46 when I left NYC, which experience has shown wouldn’t have been a good choice.”

      What experience? If anything, the E46 has fewer electrical quirks than the E36 – although they still have the typical BMW cooling system that needs replacement at 60-80k miles due to low-quality environmentally friendly recyclable plastics.

      Totally happy with my E46 330i, btw. Needless to say, it has a manual transmission, the Sport package, and few other options.

      • 0 avatar

        I didn’t find them much fun to drive, with the steering too light and numb. They feel completely different from earlier models, to the point that my test drive when I considered buying one lasted a few hundred feet. Three of my closest friends had E46s. They had problems aplenty, particularly with failing sensors and ‘body computers’, but also with front suspension lower control arms that wore out much faster than similar parts did in E30s or E36s, and the dealers swore everything was fine until the warranty ended, only to scream bloody murdert that the control arms had to be done immediately(54K miles) when my friends had to pay for them. The dealer padded the one bill I saw to the tune of $1,800 for work that was less than half as much on earlier 3 series and done much less frequently. From what I could tell, the rapid wear was because the parts were virtually the same while the car gained 450 lbs from their first use in the E30. The lower control arms on a 325xi wore out quickly too, which I would think would require a part unique from earlier cars. Then there are the plastic water pumps and radiator resovoirs, falling interior window surrounds, cracked dead pedals… Only one of the E46s is still in regular use, but it spent much of its life garaged while its owner was deployed in Afghanistan and Iraq. None of the E38, E39, or E46 owners I’ve known replaced them with another BMW. Actually, that isn’t true. I had a coworker who invoked the lemon law to make the dealer take back her E46 M3 SMG and replace it with one of the very first E92 335i automatics, which she intended to use the lemon law to replace with an E92 M3 when it became available with an automatic. She was clueless about everything except how to take advantage of people though. I don’t know what she wound up doing, as I didn’t stay in touch with her when she went back to working for her mother in real estate. Anyway, I like the way the E46s looked, and the engines were great. I didn’t care for the drive and they didn’t seem to have fewer problems than E36s, even if the interiors looked better before falling apart.

      • 0 avatar
        Sam P

        I’ve driven an E30 325i and the E30 was much more fun than the E46. The visibility’s better, the old M20 six sounds better than the M54 in my E46, and it’s lighter and more tossable. The E46 feels more like a 5-series, but is easy to live with, comfortable, and still fun to open up on twisty 2-lane mountain roads. Plus, the handling limits in the E46 are much higher (for idiots like me).

        Sounds like your E46 owning friends had horrible luck with their cars. As for interior disintegration, I live near Seattle and park in a garage every day. Interiors don’t get ruined by sun here. Might be more of an issue in SoCal or Florida.

  • avatar

    Owning a BMW is like owning an airplane. The maintenance schedule is more important than the age of the frame.

    Sell it in Roundel to a fellow BMW lover, so it goes to a good home and you get a best price. Assuming school works out for you as intended, BMW will build you a new one, even to your order.

  • avatar

    I like the E36, but at that age, the chance of it having expensive electrical glitches rises dramatically. If it was an E30, I would be screaming at you to figure out a way to keep it. But not an E36, especially one thats not an M3. If its as nice as you say it is, you will get good money for it… probably not as much as you have in it, but it wont be embarrassing. You dont want to leave it with family and come home to find it needing major work anyway.

    • 0 avatar

      While E36s aren’t durable goods like the E30s were, they are probably the best handling BMWs ever made. The steering is firm while still having great feel and being quicker than all E30s except the M3. The E46 was a major retrograde step in steering feel, because the wannabe Mercedes contingent inside BMW had their way with making it feather-light. The ride of the E36 was fantastic and well controlled, without the clumping feeling of the current run-flat shod frauds. The various M50 derivatives are reasonably efficient, smooth, and powerful. The direct drive 5-speeds are pretty reliable and shift well. The automatics are awful, as exhibited by my mother’s, which got its 2nd transmission at 30K miles and 3rd at 60K miles. They perform well for 29,750 miles though. The other recurring problem is the power window motors on the coupe. We got about 25K out of the driver side one each time and 50K out of the passenger side one. If you carry passengers more often, expect the passenger side to fail more often. Had the same problem with a Mini Cooper, which shares the unfortunate frameless side windows that open a few milimeters each time you open the door. Other than that, the only problems were the result of electrical problems in the dash that resulted in the dealer butchering the dash each time they took it apart and the interior side panels that literally came apart in the sun. The electrical system always seems to have a draw that the dealer can’t find that kills the large, expensive batteries. The E36 was an unfortunate experiment in recyclable materials that self-recycle. Even the paint is awful on ours, which has been covered the vast majority of its life. My friends with E46s had the same problems with their interiors wilting, except for one car that had dark tinted windows. The ones who bought sedans didn’t have the power window problems.

      When the 325is starts, It really is a joy to drive. I don’t think I’d want to park it for a while and then try to put it back on the road though. It is being prepped for sale right now, actually.

  • avatar

    If there is any doubt about selling it, don’t sell it. I myself am a 20 year old college student, so I can understand the situation. I recently had a 2001 Expedition that looked like it just left the showroom. A frugal friend of mine badgered me about getting something more practical, so to shut him up I listed it on craigslist. Within two hours I had an offer for my asking price. Needless to say it was difficult to justify not selling. Long story short, I loved that car, with its cumbersome handling, slow acceleration, and 12mpg average. Of course I could eventually buy a newer one, but it simply wouldn’t be the same. So, if for any reason you think you should keep the BMW, then definitely keep it because chances are you won’t be able to buy the same one again.

  • avatar
    Rod Panhard

    Sell it. They made them in a really big factory and there are a lot of enthusiasts out there just like you in a similar situation. And guess what, there will be when you’re done with graduate school.

    And what’s more? Half the fun of owning a car (or motorcycle for that matter) is finding it. That’s part of the bonding process.

    Sell it.

  • avatar

    As many others have said, sell it. Other than out-and-out abusive driving, there is nothing harder on a vehicle than non-use.

    Selling also gives you the opportunity to end the relationship with fond memories. It’s not unlike dating; you can start dating again after a long hiatus, but you’ve both changed. And in this case your “date” will have been deprived of a proper diet and exercise for some time.

  • avatar

    Considering your age and how fast things are changing in your life, sell the car now. You may regret it ten years from now, but that’s a non-issue – you’ll have moved on and it’ll just be a good memory – like how I’d love to have my 1964 Chevy back – that won’t happen, either.

    You have bigger and better things to concern yourself with than a car – like finding a decent job and a place to live that you can afford. Do not under any circumstances turn into a professional student! Graduate and make something of yourself, THEN buy a car you really like, unless you get married, then you have a whole new set of priorities!

  • avatar
    DC Bruce

    You answered your own question when you said that you would not need a car in graduate school. Owning a car you don’t need (or use) has three principal, costs: opportunity cost of the value of the car (i.e. what you could do with the money tied up in the car), depreciation, and insurance. All of that stuff happens, even if it’s sitting in a garage under a nice, soft car cover.

    So, sell the car if you don’t need it. If you sell it to a knowledgeable buyer, he/she will appreciate what you’ve done to keep it in good shape, and the price you can get will reflect that. This is not a commodity car like, say, a Honda Civic.

    IMHO, owning an old car only works financially if you’re at the bottom of the depreciation curve (i.e. it doesn’t depreciate much more) and (1) it’s known to be reasonably reliable and not require gobs of repairs, (2) you have the time and ability to do a lot of the repairs yourself and/or (3) you have access to a competent mechanic who is skilled, honest and doesn’t charge an arm and a leg.

    Sadly, all cars are trending toward increasing complexity which makes repairs more expensive and requires more skill and/or more equipment. The sophisticated electrical management system in current BMWs (whose purpose is to optimize fuel economy by minimizing parasitic drag on the engine from accessory drives — even oil and water pumps are driven electrically) will eventually trickle down into “main street” cars — all driven by government mandates for ever higher fuel economy.

    It will be interesting to see, for example, whether the current generation of expensive automotive diesels from Mercedes-Benz and VW Group can match the incredible durability and longevity of the simpler diesels sold by M-Br in the 1980s. The Mercedes 4 cylinder and 5-cylinder turbodiesels created the reputation for durability that the current generation of automotive diesel engines enjoy. It’s worth remembering that all of the other automotive diesels (at least sold in the U.S.) of that era were, in varying degrees, a disaster: not only the V-6 and V-8 diesels sold by GM, but also the diesel sold in the VW Golf/Rabbit, the dieselized version of Audi’s 5-cylinder engine sold in the “5000” (I owned one) and the VW-sourced diesel sold in Volvos. I don’t know whether Peugeot sold its diesel over here or not, nor how reliable it was. And by “disaster” I do not mean that these engines were necessarily underpowered, smoky, noisy or hard-starting in subfreezing temperatures (although some where), but that they suffered major failures, like blown head gaskets and the like, at under 50K miles.

  • avatar
    Downtown Dan

    Original poster here.
    Thanks for all the help, guys. I’ve decided to let it go and put it up for sale once everything’s confirmed for next year. Sad moment, but I’ll get over it.

    And once I’m finished with school, I’ll rejoin Team BMW with a vengeance by buying my dream car– a light blue E30 325 four-door with a Thule rack. Either that, or a B7 Alpina– depends on how the job market is.

    • 0 avatar

      If you find it comforting, you can sell it to this fellow BMW enthusiast, provided you’re in the northeast somewhere. (I came very close to buying a 323is once, but it was poorly modified.) As someone who has stored several cars, I agree that nothing is worse for a car than sitting. Selling a car at its peak is more satisfying than fixing gremlins and cleaning mold from your previously spotless baby.

  • avatar

    You are on the right track, son, but when you get out of grad school, look into an E36 M3. In fact, I’ll probably be about ready sell mine around then! It’s 4-doors, so if you meet someone in grad school and are thinking of settling down by then, you will have the perfect family performance sports sedan.

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