Additional external differences compared to the standard Z3 models included front and rear bumpers, gills, quad exhaust, trunk, and mirrors.

[clarification needed] The M Coupé E36/8, manufactured from 1998 until 2002, was developed under the leadership of engineer Burkhard Göschel with the intention of adding increased torsional and structural rigidity to the Z3 roadster's chassis.

The development team had a hard time convincing the board of directors to approve the model for production, but it was eventually given the green light as long as it remained cost-effective to produce.

The S54 engine was detuned to 315 hp despite a shorter better flowing exhaust and the car was denied the Getrag S6S-420G 6 speed transmission despite the chassis being built with the necessary mounting points.

The differential gearing on the S54 M Coupés was increased from 3.23 to 3.15 to further handicap performance while the E46 M3 paired a 3.63 final drive to same powertrain.

The M Coupé powered by the S54 engine is one of the lowest production BMWs with only 1,112 built in total for all markets.

The difference in peak power and torque is due to the catalytic converters being located closer to the engine on the North American spec cars, which allows the catalysts to heat up faster and reduce cold start emissions.

Like all Z3 models, the M Coupe and M Roadster's suspension is made up of MacPherson struts in the front and semi-trailing arms in the rear.

Compared to the six-cylinder Z3 roadster, however, the M roadster included modifications such as wider front and rear tracks (by 0.4 in (10.2 mm)), reduced ride height (by 1.1 in (27.9 mm)), modified front suspension geometry, firmer springs and shocks, thicker anti-roll bars, stronger semi-trailing arms and a reinforced subframe.

When the M roadster switched to the S54 engine (2/01 production), the chassis was upgraded to the stiffer springs and shocks developed for the M Coupé.

The roof and windows add an additional weight of 10–15 kg as compared to the roadster.

This clutch-type, torque-sensing LSD features the Variable M Differential Lock, codeveloped with specialists at GKN Viscodrive GmbH.

The M Coupé's springs have higher rates and the dampers are more aggressive compared to the Z4 M roadster.

[21] Front lower control arms are shared with the E46 Performance Package (ZHP) with unique offset bushings for the Z4M.

Despite increases in rotor size, brake pads are the same part number for all E36 M3, E46 M3, and M Roadster/Coupé models.