The BMW E46 M3 and the E39 M5 are both highly coveted enthusiast vehicles that have seen volatile pricing changes over the years. Here we dissect and compare the two and decide which one comes out ahead.
It’s often said that the best era of BMW was the early 2000s – the lineup was solid, and the cars deserved BMW’s famous tagline “the ultimate driving machine.”
Today, most of the models from that lineup are just second (or fourth) hand cars, but there are two that still hold a place in the hearts of gearheads across the globe – the E46 generation M3, and the E39 generation M5.
High-mileage and rough examples will still fetch between $10,000 and $20,000, while clean low mileage examples can be see listed at over $50,000. To those outside the community, this of course begs the question – why are so many people willing to pay so much for twenty-year-old BMWs?
To those within the community, the question, though, is which is better – and which is a better investment?
Photocredit: @issac_photo and @chrisleestudios
To start with the first question, we need to understand what these cars were, and what they are today. At the time, BMW wasn’t building a 2-Series and an X1 that could be leased for under $300 a month – BMW was still a luxury brand that people aspired to, rather than a car a recent college grad could lease no problem.
Within that brand, the M3 and the M5 were the top of the line with regards to performance and driving experience. The M3 was offered with the SMG II gearbox, one of the earliest paddle-shift gearboxes, and a traditional manual and the M5 was only offered with a traditional manual.
The SMG II cars haven’t aged as well and aren’t as desirable today, but at the time paddle-shift gearboxes were on Aston Martins and Ferraris, not reasonably attainable cars. Today, the E46 and E39 are considered the last of the breed – the last of the truly analogue M cars. The following M3 is still considered fairly desirable, but the M5 that followed was a basket case in terms of reliability, and many of them mechanically totaled themselves.
Bit by bit, BMW has moved down market to sell more cars, but selling more M cars meant selling to people who were buying them for status, not for what the brand meant, which in turn resulted in M cars losing their edge – the harshness and nimbleness that made them tricky but great to drive – in favor of technology and comfort because the status buyers complained.
As with anything that has a fan following, those that represent the end of an era, particularly a golden era, are considered the most desirable and that’s what the E46 M3 and E39 M5 are – the end of BMW’s golden era.
Now that we’ve got some context as to while these cars are so desirable and command such a premium over their competitors from the time, let us consider the second question – which is better? To answer that we need to consider the market segment these cars fill, because it isn’t the same segment.
The E46 M3 is a comfortably sized sports coupe with a straight six engine, producing 330ish horsepower, while the M5 is a sports sedan with a 4.9L V8 that produces roughly 400 horsepower. Without harping on too much about the ins and outs of what each one means, the basic analysis is that the M3 is phenomenal as an enthusiast car, while the M5 is much more livable every day.
I recently drove both on the same set of roads, using very lightly modified examples that cost their owners just a hair under $20,000 each as they sat, and by a longshot the M3 was more fun. However, the M5 was much more comfortable, and with both having custom exhausts, the M5 just sounded better to my ear. In their day, these two cars weren’t competing for the same market segment by any means, but today both are highly sought after by enthusiasts and as I mentioned higher mileage examples are quite affordable, so there will be cross shopping of the two.
The decision of which is better is entirely subjective, but from my time with the two cars I can offer a bit of clarity to potential buyers, and curious enthusiasts. As a weekend or second car, the M3 is almost unrivaled at its price point.
As part of my examination of the two cars, I took them both up and down a favorite twisty road of mine and short of a Ferrari 348 and perhaps a manual transmission Lamborghini Gallardo, the M3 was the best car I’ve ever had through there. It was planted and confident through the corners, and I could feel it begging me for more the whole way through.
The M5, by contrast, is a much more livable car. The suspension never felt as harsh and the seats were much more comfortable. It didn’t feel as razor sharp as the M3 through the twisty road by any measure, but it did perform decently. As a car, then, I have to give it to the M5, as it was better at doing both daily and weekend work than the M3, and it’d be the recommendation I’d give to an enthusiast who could only have one car. But the M3, as I mentioned, is simply incredible as weekend toy, and would be my recommendation for the enthusiast that can afford to have a car to drive to work and a car to enjoy on fun roads.
Photocredit: @issac_photo and @chrisleestudios
Finally, that brings us to the question of value and which will be the better investment. Frankly, I don’t like considering cars as investments because it leads to cars becoming expensive paperweights that are stashed in garages, not the incredible machines their designers intended them to be.
That said, though, the reality is that anything as expensive as cars like these will be considered an investment by the vast majority of people, and as such long-term value must be considered. Currently, the M5 is trending higher than the M3 on the collector markets, which does make sense as it was one of the last proper enthusiast sedans that was only offered with a manual transmission.
By contrast, the M3 has much more competition, as the sports coupe segment was much wider, and offered manual transmissions for much longer. However, I suspect that as time goes on it will become much harder to find a clean unmolested M3 with a proper manual gearbox than it will be to find a clean and unmolested M5, which leads me to believe that manual M3s will surpass M5s in value.
With all this in mind, I suppose the only way to properly conclude this article is to make a more sweeping recommendation of which car to buy, but I really don’t think that that is possible in this case. While the two cars may be lumped together now because of their market values and their status within BMW’s history and the car community as a whole, the two couldn’t be more different.
As a long-term buy and hold investment, a low-mileage and unmolested manual M3 will, in my opinion, appreciate more than a similar M5. But as a car to drive and use as they were intended to be, I’d have to recommend the M5 to someone who needs one car to do it all as it can perform out of its element as a weekend car better than the M3 can perform out of its element as a daily car.
Of course, the kind of person considering a car like an E46 M3 or E39 M5 as a daily car, probably wouldn’t be the sort who would complain about a rougher suspension or tighter seats, so take from that what you will.