BMW E34 5-series (1988 - 1996): Buyers Guide

By: Cliff Chambers, Photography by: Joe Press

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Expensive, fast and sophisticated, the E34 5-series is a great drive, but buyer beware ...


1988-96 BMW E34 5-Series

The 1980s was a decade of rapid expansion for BMW. Having made a mountain of money out of its E30 range, it spent the lot developing a swanky new-generation E32 7-Series, and finally replacing the mid-sized E28 5-Series with a modern and relevant contender.

Arriving in 1988 with a fresh shape and vastly improved dynamics, the E34 5-Series offered the world market a massive model range. However, the cost of ADR compliance and appalling exchange rates priced even the cheapest 5-Series in Australia - the 525i - at $75,000 before a single option was added.

Much of the E34 had been developed in conjunction with the larger and heavier 7-Series, so packing that car's 3.4-litre six-cylinder engine into the E34's lighter and more compact frame was bound to produce a version with something special for performance-loving drivers.

The 535is that appeared nearly a year after the main range in June '89 cost $103,500 - just $100 more than a base-model Jaguar XJ6. The four-speed automatic was a ridiculous $4000 more expensive but the 535is was supplied with loads of equipment including Bison leather trim, premium sound, a bodykit, ABS, an LSD, cruise, sunroof and alloy wheels.

Output from the engine in 'is' form was a relaxed 155kW, and with a high-ish final drive, the five-speed manual took 8.4 seconds for the 0-100km/h dash.

More power was clearly warranted and the M5 released in 1990 delivered performance a-plenty. Its version of the straight-six displaced 105cc more than the stock version, with an extra camshaft and separate throttle bodies for each cylinder, 10.0:1 compression ratio and special exhaust. Together, they helped unleash 232kW and slashed acceleration times by two seconds over the 535is.

High prices, low volumes and a persistent recession meant that local M5 imports had to end in 1993, however the model continued elsewhere until 1995 when replaced by the E39 series. Later versions used a 3.8-litre straight six with 250kW and overseas buyers could also carry things ultra-quickly in a Touring station wagon.

In place of the super-powered six, BMW introduced a V8 version of the E34, which appeared in May 1993 and spent three years in our market until it was superseded by the new-generation E39.

Weighing 1660kg, the 540i was heavier than an HSV Senator but encompassed a complex body/chassis structure and a wealth of luxury fittings including leather trim, lots of walnut embellishment, power-operated sunroof, and electric front seats with three memory positions.

The 540i came initially with five-speed automatic transmission, but from mid-1995 a six-speed manual 540i Limited joined the range. Just 70 were officially imported and they cost $145,000 - still $12,500 less than the M5 had been when it disappeared two years earlier.



When new, these BMWs were seriously expensive cars, built for people with expectations in line with their outlay. The design, fittings and finish were all first-rate and mechanical integrity beyond reproach. Factor in 20 years of deterioration, plus some neglected maintenance, though, and the edge will have been dulled, if not entirely blunted. Even when new, the 535is was a bit slow in the steering - 3.5 turns lock-to-lock against the 540i with 3.2 and the M5's 3.1 - and rode on 15-inch rubber with tallish side-walls. Body-roll was more apparent than it should have been in a 'sporty' sedan and compromised the car's composure on bumpy, winding roads.

The straight-six is a nice engine with smooth power delivery and reasonable mid-range acceleration times - 80-110km/h delivered in 4.5 seconds by the five-speed, but almost a second slower in the auto.

If press reports of the M5 weren't clouded by sheer astonishment, those problems had been well and truly overwhelmed by application of M-Power and some major attention to chassis tuning. Where the 535is made its maximum power at 5700rpm, the M5 howled to its peak at 6900, with a cut-out 500 revs further up the dial.

Manual was the only transmission available in the E34 M5 but with so many revs to play with, BMW could fit a 3.9:1 final drive and still manage 250km/h on the nearest autobahn.

Stiffened suspension accompanied by 17-inch wheels and Z-rated, 45-profile rubber delivered exceptional stability and grip levels. Photos of the M5 being cornered quickly show the body sitting almost flat and crouching on its outside rear wheel for the perfect corner exit. Apparently they can be made to oversteer, but only with severe and potentially suicidal provocation.

The M5 cabin ranks with BMW's finest efforts - large, legible dials, a logical layout, superb leather-bound seats and enough on-board toys to keep a jet pilot occupied. However, these cars are now scarce and expensive, both to buy and run, so that leaves us to contemplate the E34 V8.

With the five-speed automatic transmission, the 540i delivers relaxed performance that will transform into an instant rush of acceleration with a flick of the gear lever or stab of throttle. These were the first 5-Series with switchable stability/traction control, but the rear suspension is so good that normal driving never generates a lurch or chirp from the tyres behind you.

Fuel consumption from the six-cylinder cars and V8 are similar and you will need to be pushing pretty hard to do worse than 15L/100km, even from the M5 or V8.



It is a sad fact that high-quality cars, as they grow older, encounter problems that frequently consign them to the wrecking yard. A fault that might cost $1000 to fix in a lesser model is simply uneconomic if it afflicts a car with the mechanical complexity of a 5-Series.

It is now very difficult to locate a 535is in better-than-average condition or without questionable longevity. Very good cars are likely to cost $8000 but an ordinary one could be worth less than $3000.

The 540i sold locally in sizeable numbers - probably close to 1000 during its three years in our market - yet even these are relatively scarce and surprisingly cheap. The few seen recently were typically showing 150-200,000 kilometres, but asking prices for the automatics were all below $10,000. However, you can spend twice that on an outstanding LE six-speed.

M5s occupy a far more exalted place. Owners seem prepared to invest in their cars' survival but when selling time comes, they expect their outlay to be recouped. Asking prices begin at $15,000 and can exceed $35,000 for cars described as "exceptional".

V8s are best acquired by keeping your eyes fixed on Unique Cars advertisements or perhaps contacting a few specialist dealers who occasionally see these cars as trade-ins on later models. Several M5s have been offered recently in the open market but to have a shot at owning the best cars, pal up to the 5-Series owners at your local BMW Owners' Club branch.

As a last resort, look overseas but be cautious of cars that have spent most of their lives in icy environs. South African imports and some from Japan offer the best chances to find a car that isn't rust-riddled.



Body & Chassis

Look at bonnet alignment and chassis rails for indications of crash repairs. Rust isn't usually a problem but cars, especially M5s, that weren't sold new in Australia need a very careful check for underbody corrosion due to being used on icy, salty roads overseas. If a local car is going to rust, the most likely spots are around windows and the sunroof, wheelarch lips and the boot floor. Check headlights to ensure they shine with equal intensity and light bowls haven't tarnished.

Engine & Gearbox

Six-cylinder or V8, these are sophisticated engines that must be properly maintained to survive and continue to deliver their best. Head gasket woes have killed a lot of lower value cars because replacing a warped or cracked head/heads and associated items can generate bills beyond $8000. We found no reports in Australia of problems with the Nikasil cylinder-liner coating used in early V8s and attributed to fuel with high sulphur levels. However, if the car you're considering blows exhaust smoke of any kind, find another one. Check the engine oil and under the filler cap for coolant contamination and listen a few minutes after test driving for hissing or gurgling from the cooling system. In a manual car, back off sharply a couple of times in second gear to hear for any driveline thumps and floor the throttle at 30-40km/h in top to reveal clutch slip. The five-speed automatic should upshift without any jerkiness.

Suspension & Brakes

Pin-sharp handling is one of the E34's most attractive attributes and there is a lot under these cars that may need to be replaced if they bounce, rattle or lean excessively. Replacing worn front or rear suspension components on an M5 will cost $2500 in parts alone. Check the power steering unit and hoses for weeping or deterioration. Squealing brakes are a sign that the costly rotors and pads will need replacement. Damaged wheels, especially on an M5, are difficult to source and expensive to replace.

Interior & Electrics

There's plenty inside an E34 to repair or replace so avoid cars that show noticeable seat trim wear. Make sure that electric seat adjusters have not frozen from lack of use and that the air-conditioner delivers cold air. Replacement A/C parts for some models can only be sourced from BMW and are expensive. The wiring harness which runs alongside the boot hinge can fray, leading to loss of rear lights.



BMW E34 5-Series (1988-1996)

Number built: 535is - 4838, M5 - 789 (RHD only), 540i - 26,483 (inc. 3203 six-speed).

Body: All-steel, integrated body/chassis, 4-door sedan or 5-door wagon

Engine: 3.4-litre SOHC 12v or 3.5-litre DOHC 24v 6cyl; 3.0- or 4.0-litre DOHC 32v V8

Power: 210kW @ 5800rpm*

Torque: 400Nm @ 4500rpm*

Performance: 0-100km/h - 6.5sec, 0-400m - 14.8sec**

Gearbox: 5- or 6-speed manual, 5-speed automatic

Suspension: Independent with struts, A-arms, anti-roll bar (f); independent with semi-trailing arms, toe-control links, coil springs, anti-roll bar (r)

Brakes: Discs, power-assisted with ABS

Tyres: 225/60R15 or 235/45ZR17 radial

Price range: $5000-40,000

Contact: BMW Clubs in all states

* 540i, **540i manual



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