3 Reasons Why the E36 M3 Increased in Price (and WON’T depreciate again)
This article was written in 2020. You’re reading this sometime well after 2020, and a lot has likely changed!
Ok, this one isn't technically an M3, but it has an S54 swap, so we'll call it even?
The U.S. E36 M3 (1995–1999) was neutered. While the European version had 321bhp, the U.S. version only had 240bhp. The E36 M3 also didn’t have the rad box flairs of its race-bred predecessor (E30 M3), nor did it have an engine as special as the one in the M3 that followed (E46 M3).
So, why are prices of this “bastard-child” M3 increasing?
There are three reasons why I suspect the E36 M3 is appreciating (and why it likely won’t depreciate again):
Nostalgia
Media coverage
Basic economics
1. Nostalgia and Old-School Cool
Nostalgia is “a sentimental longing or wistful affection for the past.”
With the E36 M3 firmly in the past, especially regarding automotive technology, why is it appreciating? It’s because it’s “in the past.”
The E36 M3 comes from an era where cars were more “analog,” meaning they didn’t have all the fancy technology that cars have today. A new Subaru Forester is more technologically advanced than a '90s BMW M3. Nearly all new cars are. The E36 M3 comes from an era of cars that had features like a physical dipstick, hydraulic power steering, no adaptive cruise control, and no TPMS.
That’s one reason why they’re becoming more valuable. Car enthusiasts are realizing that analog automotive vehicles are never going to be made again. This is supported by the increasing values of everything from analog Porsches to analog Hondas.
In June 2020, a 2000 Honda Civic Si sold for $50,000 — during a pandemic!
2. Media and RAD Events
The second reason why the E36 M3 is appreciating is because of media coverage and niche events. I’d argue that there was an inflection point in January 2020 when a certain someone’s 1995 BMW M3 Lightweight (Paul Walker’s) sold for $385,000 at the Barrett-Jackson Scottsdale auction. This was the most an E36 M3 had ever sold for, and it fortunately (or unfortunately if you’re trying to buy one) shined a light on the previously-overlooked U.S. E36 chassis.
One of Paul Walker’s LTWs happened to be on display at RADwood LA in January 2020 before heading to the 2020 Barrett-Jackson Scottsdale Auction.
Update: It sold for $385,000. Four other Lightweights sold for between $220,000 and $258,500.
In addition to events like the Barrett-Jackson auctions, which often sell the crème de la crème of automotive vehicles, RADwood’s automotive event, which focuses on '80s and '90s culture, has been gaining a bodacious amount of momentum. The first RADwood event was held in 2017 in the SF Bay Area, and there have been numerous other RADwood events across the United States and even in the United Kingdom. If you have the chance to go to one, I highly recommend it. It’s one of the few times you can wear head-to-toe neon-colored spandex and blend in.
In the media space, the rise of successful YouTube content houses like Donut Media and niche online auction sites like Bring a Trailer and Cars & Bids have enabled enthusiasts to learn about and shop for some of the coolest and quirkiest cars. Plus, there’s a little thing called Instagram where the E36 has 2.5 million posts under the #E36 hashtag. Compare that to #E30 and #E46, which both have 2.4 million posts.
The last event series that’s helped increase the value of the U.S. E36 M3 are track days. Over the last 10 years, it’s become increasingly easier to get yourself and your car — no matter what you drive — on a racetrack. This has led to increased interest and demand for track-capable chassis that are cheap to maintain and fun to drive — like the U.S. E36 M3.
3. Economics 101: Supply and Demand
Now we get to the nerd part: economics — supply and demand.
With increased media attention combined with niche car events highlighting the E36 and its rad era, there was an increase in demand. In economics, when demand increases while supply decreases, prices go up. This is true for most, if not all, products.
In this example, the U.S. E36 M3 would be moving from right to left, signaling an increase in price due to increased demand and decreased supply. It’d be worth more than a slice of pizza.
Clean U.S. E36 M3s have been becoming rarer every day since BMW stopped production of them. But it only started mattering after prices “bottomed out” in 2020 and demand began increasing. The chances of you finding a clean E36 M3 for $5,000 are pretty much gone, whereas that was a possibility in 2018 and 2019.
Apart from nostalgia, media coverage, and economics, the U.S. E36 M3 wasn’t that bad of an M car.
It’s cheaper to own than the older E30 M3 and younger E46 M3.
It’s extremely track-capable.
It’s fairly lightweight compared to cars today, making it nimble and fun to drive.
There’s large aftermarket support, making it easy to modify the car to your liking.
The massive worldwide community makes it easy to work on and maintain by yourself.
Much like a company’s stock price, it doesn’t matter if you don’t think the U.S. E36 M3 is worthy of this appreciation (literally and figuratively). Just like how the market decides the value of a stock, the market is currently deciding the value of the U.S. E36 M3. And it’s going up.
