Faults:

The extremely complicated heater valve system failed pretty much immediately, and later attempted to catch fire, so I disconnected it. It costs $120 at the cheapest for the part so I haven't bothered getting one. It doesn't get very cold here anyway.

The center driveshaft support bearing was severely worn when I bought the car, as was the differential. I replaced both and got rid of deafening noises. One of the drive axles now appears to be going bad as well.

I snapped a timing belt at 219,000 miles and had to replace the head. Ironically replacing the head took less time than actually swapping in a new timing belt, as it's a relative nightmare to get at parts in front of the engine. Replacing the belts every 30,000-40,000 miles is a very good idea, as it saves the aggravation of sourcing a good cylinder head.

After replacing the head the car runs great. I was shocked at how little wear there was in the cylinder walls. The original crosshatch machining marks were still there.

When the suspension bushings and control arms start wearing out, everything wears out at the same time, and gets extremely expensive. Once done they'll go another 5-10 years though.

Other than that the car has been extremely solid considering its extremely advanced age.

General Comments:

This is the best handling car I've ever owned. I had a 325i (E30) and it was far twitchier than this. With the 18" E39 M5 wheels and 235/255 tires front and rear, it's very well balanced with incredibly high lateral g ability. I've cranked this car into a 45 degree drift on an on ramp cloverleaf in the rain and held it there easily the whole curve. That's how well balanced this car is. Only pure lunacy behind the wheel can exceed this car's threshold for cornering.

Acceleration is on the other hand bovine by comparison. The 168hp engine is entertaining from 4,000rpm onward, but absolutely gutless below that. You're not going anywhere unless you really beat on this car. With the 5 speed manual transmission, that's easy enough to accomplish. The shifting in this car is flawless and extremely fast. It always syncs up, and the gates are very easy to find.

The cheap leather in it is long since destroyed though, and the door skins are rotting away. I don't know of any car I've ever seen that happen in.

Faults:

The headliner has always sagged.

The leather on the driver's seat is getting worn.

I had an alternator go; it is not very expensive (if a local electric shop is used).

The starter solenoid went recently, but since nobody replaces only the solenoid, I had buy a new starter. It was easy to replace and cost about $120.

This car has a two piece drive shaft which requires a carrier bearing, like a big truck. The bearing wore out a few years ago. Anything having to do with the drive shaft or differential requires dropping the exhaust, which can be an expensive repair.

A $0.69 gasket blew in the cooling system, which could have caused the car to overheat (had I not been watching it). This has an aluminum head, and aluminum can warp if it gets too hot. You will want to be aware of that.

General Comments:

I love this car. It handles beautifully and has never stranded me. It always starts, even at -20 F. When they get a lot of miles they will need some repairs, but nothing out of the ordinary. This car is worth repairing in most cases. I would not advise anyone to buy an older E34 if they have no mechanical knowledge.