Engine

The straight-six petrol cylinder engines in the E46 are the M54 and M52TU family of engines. If properly maintained, these engines are very reliable, have good low rpm torque, and sound amazing. Poorly maintained, these engines will leak oil and coolant. If the coolant in the engine is lost, the engine will overheat very quickly. Due to the length of the straight 6 engine as well as materials used (alloy head and block), these engines are known to blow head gaskets and strip out the threads on the block.

Oil Leaks

As these cars are around 20 years old now, oil leaks are very common, especially if little to no preventative maintenance is done. Here are a few common area's which oil will leak from:

Source	Comments	Replacement Time (1st Time)
Oil Filter Housing Gasket	This is NOT the o-ring that's part of the black oil filter cap. It is a rectangular gasket that seals the engine block to the aluminium oil filter housing. These go brittle over time and will leak a lot of oil due to the high oil pressure going through the housing	2-3H. Not very difficult. Keep track of which bolts go into which hole as they're not the same.
Oil Pan Gasket	Common to leak as the bonded rubber goes brittle and doesn't seal the oil pan anymore.	6H+. Difficult repair as the front crossmember goes under the oil pan. Requires an engine support bar and removal of a lot of components to remove the oil pan.
Valve Cover Gasket	Signs of this leak will be a burning oil smell smoke coming from the engine. Due to the slanted engine, the valve cover leaks oil onto the exhaust and burns. It is common for the car to continue smoking and smelling for a short while (100KM) after the gasket has been repaired as there will be some unburnt oil on the exhuast manifold that needs to burn off or cleaned.	1H. Make sure the half moons have RTV applied else the cover will still leak. Do NOT overtighten these bolts as it's very easy for the plastic valve cover to crack ($400 USD replacement). Start from the centre bolts and finish at the corners. They only need to be tightened to 9NM.
Camshaft Sensor O Rings (2)	Sometimes not an obvious leak as the camshaft sensors are quite high up on the engine. You may see oil on the air compressor or mistake it for the oil filter housing.	1H. Easy and cheap to replace.
Rear Main Seal	Verify all other oil leaks have been fixed before diagnosing the rear main crankshaft seal. If all other oil leaks have been fixed and oil is leaking between the engine and bellhousing it is likely to be the rear main seal. But it may also be the transmission input seal. Confirm the leaking fluid is engine oil and not transmission oil	12H+ Very difficult repair. Requires removal of the tranmission. Crankshaft seal requires careful installation to not pinch the seal. The larger two bolts require threadlocker else it will leak.

Coolant Leaks

Arguably the most mentioned issue on the E46 platform. The E46 cooling system runs at a very high pressure and is a complex and efficient design. Although the E46 gets a lot of hate for the cooling system, most of the components are actually well engineered with no issues. The problem, however, is the weakest link will cause the entire system to fail working and overheat the engine in a matter of minutes. As with most wear items on a car, the longevity of the cooling system will be governed by how the car has been driven. Lot's of short trips increase the number of heat cycles, which cause components to fail. I will discuss the following areas of the cooling system:

1. Expansion Tank. Very common for a hairline crack to form in the plastic and leak coolant. Also common to leak from the o rings at the bottom. If the last time the expansion tank was replaced is not known, it is highly recommended to replace this item as part of maintenance ASAP.
2. Thermostat. The E46 uses a dual stage electronically controlled thermostat which is partially controlled by the engine computer (DME). It is common for the electronic part of this thermostat to fail, which restricts opening of the valve all the way. This will cause the car to overheat, especially on hot days.
3. Hard Lines. There are two hard plastic coolant lines running from the engine block, under the intake manifold. Over time, these get brittle, crack, and cause large amounts of coolant loss. Sometimes this leak is hard to pinpoint as the coolant may evaporate on the hot engine block. If these have not been replaced, it is highly recommended to replace these. Requires removal of the intake manifold.
4. Clutch Fan. The viscous clutch fan on the E46 runs at different speeds according to the viscous fluid temp. Over time the clutch may fail and cause lack of cooling, or the clutch fan may seize and cause the fan blades to shatter as it may spin faster than it's designed speed.
5. Water Pump. Not known to cause catastrophic issues, however the plastic pulley may crack with age.
6. Hoses. Original Hoses are high quality and should not usually leak. They can handle a decent amount of oil on them without swelling and failing. Take care disconnecting these hoses as the plastic quick-connects may crack. The o ring seizes to the coupling well and requires gentle prying and wiggling to remove.
7. Radiator. The radiator has plastic inlet and outlet connectors and may fail (but usually due to someone messing around in this area).
8. ATF Thermostat. The Automatic Transmission Thermostat is almost guaranteed to break when removing the expansion tank and should be replaced.
9. Expansion Tank Cap.A failed expansion tank cap will leak and/or vent coolant at a lower temperature than designed to and may be the cause of coolant leaks. The stock cap vents at 2.0 Bar. Some people use a cap that vents at a lower pressure (e.g. 1.4 bar) to reduce stress on the cooling system components.

Vacuum Leaks