• Sport clutch kit
• Full replacement of gaskets, seals, and hoses
In all, the price of the S54 engine, extra parts, and labor to do this job can be expected to total as much as $15,000 to $18,000 before the car is ready to drive.
To remove and replace the engine in an E36, follow the specific procedure in the factory shop manual, but the following are some guidelines to give you an idea of what’s involved.
Follow These Steps
At the front of the driveshaft is the Guibo flex disc. This is a doughnut-shaped part made mostly of rubber but reinforced with steel. The front of the driveshaft has three bolt holes in a flange, and the tailshaft of the transmission has three holes on a flange as well. The Guibo has six holes, and the tailshaft and driveshaft are installed so that they use alternating holes in the Guibo.
All bolts are installed with the nuts at the forward end of the car because there’s no room to put the bolts in from the transmission side. Use a socket on the driveshaft side and an open-end wrench on the transmission side to undo the bolts. Once loosened, you can use a small pry bar to separate the driveshaft from the Guibo because the driveshaft is in two pieces and has a splined center fitting that slides to make room.
When you remove the Guibo, note that it has an arrow cast into the side to indicate which direction faces forward.
Tip: Use the parking brake to hold the driveshaft in place while you work. Release the parking brake to rotate the driveshaft.
At this time you must also disconnect the shift lever from the transmission, which makes this a good time to do a short shifter conversion if you have not already made that upgrade.
You need to remove the clutch to remove the engine. As part of the engine replacement, you should replace the stock clutch with a high-performance aftermarket model.
Profile: Valerie’s E36 M3 with an S54 Engine
Valerie Bradley went through the process of installing the S54 engine from the E46 series into her E36 M3 sedan. Here’s why she went to the expense and effort, and what she got out of building this street car into her track-day machine.
“The car is a 1997 M3, and I wanted to put more power into it. The stock engine was fine but wasn’t spectacular on the straights. I knew that there was more in the car than I could find with that engine. The VANOS was going bad, so instead of fixing that, we decided to put in a new engine,” Valerie says.
Among the options Valerie considered was a turbocharger kit and just buying a newer car with more power. But there was a good reason to stick with the E36. “Part of the reason for getting the older car was that we’re putting it on the track and that can be dangerous. I didn’t want to have that much money at risk on the track. So we decided to upgrade this car until we’re at the limits of what the car can do,” she says.
With the S54 engine installed, Valerie is ready to drive her 1997 E36 M3 on its first track day.
The swap to the E46 engine was more complicated than expected, but the results have been spectacular. “With the new engine, the car was dynoed at 297 hp at the wheels. It was a significant enough power increase to be worth the effort and money. I can actually pass people on the straights now. The car is more lively, more fun, and more nimble. There’s so much more it has to give now,” Valerie says.
In addition to the new engine, Valerie has installed a set of Moton coil-overs for suspension, Alcon front brakes, and an aftermarket radiator that was not required in order to clear the E46 engine, but does a better job of keeping that engine cool on track. Plus, the aftermarket radiator incorporates an oil cooler, which is absolutely necessary for the high-revving S54 engine.
The new S54 engine works great. You must use the digital motor electronics (DME) computer from the M3 model, and an adaptive wiring harness is needed to install that DME in any other E36, but all the major mechanical points bolt right up.
These barrel connectors are the points where the chassis wiring harness meets the engine wiring harness. Disconnect these before you lift out the engine.
One point at which engine replacement becomes hung up, literally, is the engine ground strap. Be sure it’s disconnected before you try to lift the engine out of the engine bay.