I didn’t plan that last week I would look at two very different niche German wagons and have the exercise lay bare what I like and dislike about certain cars. It just happened.

Although my preference is small, light rear-wheel-drive vehicles like my recently-departed Z3,  about eight years ago I had a 1999 E39 528iT wagon. It was a black-on-black 5-speed car with the sport package, which included a slightly lowered suspension, 17″ wheels, sport steering wheel, black Shadowline trim, and a few other goodies. Despite its bulk, I really liked it; it looked great, handled better than a vehicle that big had a right to, and was wonderful for hauling stuff.

Unfortunately, it was one of those cars on which something seemed to break weekly, and I needed it as a daily driver, not an enthusiast vehicle.

My 1999 528iT was big, cool, and needy.

So I sold it and bought a 2001 E46 325xiT wagon, which I liked but didn’t love. Although it was smaller and lighter than the E39, and also a 5-speed sport-package car, the all-time all-wheel-drive made the steering feel sluggish and the car itself under-powered. I kept it until I had to replace the front axles and CV joints; I found the job so miserable that I decided that not only was AWD not worth it for the handful of times I needed to drive in active snow, but I never wanted to own an AWD BMW again, lest I have to fix one again.

What replaced the E46 xiT three years ago is my current ride, a 2001 E39 530i, the third in a line of stick sport-package BMWs. Although I’ve grown to love this car—it’s fast, quiet, and comfortable, the stick and RWD make it fun to drive, and the fold-down rear seats provide versatility for carrying greasy stuff—I still search constantly on Craigslist and Facebook Marketplace for E39 and E46 wagons.

The problem is that 5-speed wagons are hard to find. Ideally, you’d configure an E39 or E46 wagon out of options that either are quite rare or weren’t available at all.

Here’s how it plays out: All E39s are rear-wheel drive. Some owners report that, all other factors being equal, the later (2001–2003) cars seem to be less needy than the early ones (this has been my experience as well). The wagons, like the sedans, were available with six- and eight-cylinder engines. The M62 V8 in the 540i has oodles of power (282 or 290 horsepower, depending on the year), but also has a reputation for needing timing-chain guides replacement as the mileage creeps up. And unfortunately, although the 540i sedans were available with a stick, the 540iT wagons were not.

In contrast, the six-cylinder cars may not have the grunt of the 540iT, but they don’t have the timing-chain issues, either, and they are available with a 5-speed. The pre-2001 six-cylinder wagons like my 528iT had the 193-horsepower 2.8-liter engine. It’s nothing you’d own just to mash the throttle in, but it’s adequate.

For the 2001 model year, the 528i wagon was replaced by the 525iT, and the horsepower in its 2.5-liter engine was down to 184. Plus, although both the six and the V8 were available with the sport package, in the pre-2001 wagons, the sport package didn’t include sport seats (I retrofitted them into mine).

So, in a nutshell, if you want an E39 wagon, you can’t get one with both a V8 and a stick. If you want a six with a stick, the later ones (525iT) are slower but possibly more reliable, and the sport-package-equipped ones have sport seats.  Of course, if you’re up for a project, there are several good options: You could convert a V8 car to a stick, but a nice low-maintenance configuration would be to find a wagon with a bad engine, buy a wrecked 530i stick, and drop its 225-hp mill into the wagon.

On the E46 side, in 1999 and 2000 the only available wagon was the 323iT with RWD and the 170-horsepower engine. In 2001 it was replaced by the RWD 325iT and the AWD 325xiT, both with the more-powerful 184-horsepower 2.5-liter mill. All three of these cars were available with a stick and the sport package. However, up here in the snowy Northeast, most of the wagons on dealer lots were the AWD-equipped 325xiT models. Thus, seeing a used RWD 325iT wagon on Boston Craigslist is unusual, seeing one with both RWD and a stick is rare, and finding the combination of RWD, stick, and the sport package is a unicorn sighting. Looking on SearchTempest reveals that the national supply of RWD E46 wagons isn’t much better; in a recent search, I found only a small handful of 5-speed 325iTs. Folks with sport package-equipped 325iT sticks are likely treasuring them as enthusiast cars.

Now, of course, part of the fun of this obsessive-compulsive searching is that you can vary the parameters. But if what you want is a German RWD stick wagon, the total list doesn’t expand much. Post-1980 Volkswagens are all FWD (unless you want a Vanagon—been there, fixed that). Audis are AWD. For Mercedes, I believe you need to go back to 1980s-era W123s or Euro W124s to find a stick wagon.

If you walk on the Swedish side, you’ll find 240-series Volvos, but the newest one is 26 years old. If you go American and have money to spend, there’s the insane and oddly-appealing Cadillac CTS-V RWD wagon with a six-speed and a 556-horsepower power plant. But you certainly won’t find one within a factor of ten of my price range. With BMW, you can go newer and look for an E91 3 Series wagon in the unicorn RWD stick configuration, or older for a gray-market E30 wagon, but not at a $4,000 price point—at least not yet. So the pool of know-what-I-like $4,000 performance-oriented RWD stick wagons really does appear to be E39s and E46s, and that’s about it.

And then I saw something on Cragislist that made me have impure thoughts: A 2006 Mercedes E500 wagon… for $3,200.

No, doesn’t have a stick, and yes, it’s AWD, but I was intrigued. I’ll admit that initially I was confusing the E500 designation with the 500E from the early 1990s that competed against the M5; I didn’t realize that Mercedes had shuffled their nomenclature. The E500 is more like the 540i, and to get what the the 500E used to be, you’d have to move up to the E55 AMG, which is available in an RWD wagon (though certainly not for four grand).

But still, the ad showed an intact car with a beautiful beige interior and burled walnut trim, and listed a lot of recent work. For $3,200 it seemed like an awfully good deal.

A cheap 2006 Mercedes E500 wagon intrigued but did not seduce me.

I decided that what I’d do was go see it and write about it for Hagerty from the angle of asking what is it that you get when you look at a $65,000 niche German Autobahn-cruising wagon that has depreciated to less than 5% of its sticker price. I was candid with the seller that it was “just research”; I was unlikely to buy the car, and said that I would pay him for his time and fuel.

Seeing the E500 was very enlightening. While I loved the interior and the cargo space, the actual act of driving the car did less than nothing for me. Even though nailing the accelerator certainly woke up the 305-horsepower V8, there wasn’t a single moment when I enjoyed driving it in any visceral sense and thought, “Yeah, I can see myself owning this; I wonder what he’ll take.” And really, the reason why wasn’t surprising in the least: It was a big, heavy, all-wheel-drive vehicle with an automatic transmission. (If you’re interested, it’s probably still on Craigslist in Worcester, Massachusetts).

I loved this dashboard, but the attraction to the car ended there.

Then, one day later, utterly by chance, a 2001 E46 wagon showed up online (ironically, also in Worcester). The ad referred to it as a “325i wagon with manual transmission,” so there was the possibility that it actually was a RWD stick car. The asking price was low, only $1,000 OBO. There was only a single photograph—from which I could tell nothing. The seller was a woman who explained in the ad that the car was at a repair shop and would be shown by the proprietor.

I immediately messaged the seller and asked for the VIN so that I could run it through a VIN decoder, learn whether the car actually had a five-speed and RWD, and not waste either of our time, but she didn’t respond. So I texted the proprietor and asked him. He said sure, but then never sent me anything. It was 1:00 in the afternoon and snow was predicted to move into Boston the next day. I thought, now or never; I could hop in the E39 and be out in Worcester (again) in 45 minutes and find out for sure what the thing was and be back before rush hour. So I hit the road.

I arrived at the shop, which was a very odd, old, rambling brick building in a residential part of Worcester; it looked like a 100-year-old tannery nestled between nice houses. In the yard were about 30 cars, mostly BMWs and Mercedes. I thought (a) I wish I had this building and this much space, and (b) the neighbors must just love this guy.

I went inside and found Joe, the proprietor. He pointed out the wagon, explained that the seller was tired of dumping money into it, added that he had cut the handbrake cables for her because they were causing the rear brakes to seize up (go figure), tossed me the keys, and said it was registered and insured, so driving it was fine. He also gave me the keys to the Mercedes crossover that was sitting behind it.

When I approached the wagon, my heart sank: It was a RWD five-speed 325iT, but it was just beat. It had big rust blisters. It had been sideswiped on the right, and the swipe impinged into the base of the rear door sill; the door closed but did not seal at the bottom. The interior was in pretty rough shape (the owner apparently had dogs).

I twisted the key and it started immediately. The engine sounded pretty good other than a little whirring, possibly from the power-steering pump, but the odometer read 258,000 miles, and nearly every warning light on the dashboard was on.

You can see the sideswipe damage on the right.

The dent impinged into bottom of the sill, plus rust bubbling.

The worst rust bubbling was on the rear hatch.


Seeing this certainly brings a car’s value down.

Even though the wagon was really rough, I thought I’d run it up and down the block.  I checked the antifreeze and oil levels and they were both fine. Unfortunately, when I went to move the Mercedes that was blocking it, I found that its battery was completely dead. I thought, I’m done.

I went inside the shop. Joe had apparently gone to lunch, but the receptionist asked if she could help me. I handed her both sets of keys. “Did you get to drive Jane’s wagon?” she asked.

“No,” I explained. “The Mercedes behind it has a dead battery.”

“Oh,” she said. “I can come out with a jump pack and move it.”

“I’m not really that interested in it,” I said. “It’s pretty rough.”

“Where do you live?” she asked.


“So you just drove like an hour to see the car, and you’re not going to test-drive it?”


“Let me jump it for you. It’ll only take a few minutes.”

I thought about it. “Only if it’s no trouble,” I said.

The jump pack she brought out was dead. She went back inside for another. I tried to wave her off, but her kindness was very insistent. While we were connecting the second jump pack, I commented on the interesting building and property. She said that they’d been there for a few years, but were moving next month. Damn, I thought; if I actually wanted the car, that might be a useful bargaining chip. Too bad I didn’t.

In just a few minutes we had the Mercedes moved, and I cautiously piloted the thousand-dollar beat-to-crap RWD five-speed E46 wagon out of the muddy parking lot.

As soon as I headed off down the side street, to my stunned surprise I instantly felt connected with the ratty 325iT. I tossed the wheel back and forth and reveled in the crisp steering response. I hit the gas and smiled at the snappy throttle. I shifted to second and then to third, and marveled at how much fun it felt.

That is, it was everything that the E500 wagon was not.

Then I worried about the fact that all the dashboard lights were on. I wondered if the alternator was working—and remembered that I had a multimeter in the trunk of the E39. I headed back to the parking lot, checked the voltage, and found that it was fine. With that concern vanquished, I took the 325iT on a longer test drive. It clearly had any number of issues—most noticeably bent wheels and likely worn-out front-end components—but it ran great, there was no visible oil smoke, the temperature reached the middle of the gauge and stayed there, and when I returned, I didn’t see any fluids streaming out from under it.

I went back inside again, handed the keys to the receptionist, and profusely thanked her for not letting me leave without driving the car.

So, in an instant, the 325iT, even in its badly beaten-down condition, completely validated my whole “I like smaller, lighter rear-wheel-drive stick cars” thing. I hadn’t sought out and driven these two wagons as test cases to prove that premise—not at all—but there it was.

Unfortunately, when I got home and ran the VIN, I found that the car had a salvage title due to a front-end collision. I also, however, found the VIN on a forum, and posts that indicated it had been previously owned by a gentleman in New Hampshire who had slathered time and money on it. It was the current owner who had let it go to seed.

The next day, Joe, the proprietor of the repair shop, called me. “What did you think about Jane’s wagon?” he asked. I told him that between the salvage title, the mileage, the warning lights, the dents, the rust, and the cut handbrake, it didn’t have much value.

“Name a number,” he said. “If you say three hundred bucks, I’ll just tell her three hundred bucks. It’s no skin off my nose.” I told him that I’d think about it and e-mail him later.

This put me in a funny situation. These days, I like to have a face-to-face with a seller and ask the simple question, “What do you need to get for it?” Folks will sometimes name surprising numbers when you phrase it that way. If the number is reasonable, and I want the car, I’ll simply accept it. But the downside of that technique is that I feel that it takes away my ability to make a low offer without being rude. Here, a representative for the seller seemed to be encouraging me to lowball.

That evening, I sat down and wrote up the pros and cons. The cons clearly outweighed the pros. It would take a lot of work to make the car inspectable. And even once I did, what would the car be for? Would I use it as a daily driver? Did I like its snappiness so much that I’d sell the heavier E39 530i sedan and use this higher-mileage, more-beat-on E46 wagon instead? Probably not. However, there was the rationale that my son Ethan, who lost his license years ago, is getting it back, and needs something to drive.

But then I wrote the following: “Next cheap project car to generate content? Buying challenged cars you shouldn’t buy, bringing them back from the brink, driving them, and writing about it is what you do. It does fit the profile. For the right price, maybe. And who else has a beater E46 RWD stick wagon? No one.”

Suddenly the path was clear. I sent the seller a detailed e-mail explaining my position and offering her $400, with the carrot that, if she wanted the car gone—Massachusetts has a strict lemon law, and selling a car that can’t be inspected due to the check-engine light being on and the handbrake not working can be difficult—I was her guy. I sent a copy to Joe in case he was authorized to act on her behalf. Joe sent me a one-word response: “Okay.”

That was five days ago. A day later, I saw that the seller updated the ad to include some of the needed work I’d listed in my e-mail. She did not, however, change the $1,000 OBO price. I’ve heard nothing, which is probably for the best.

But it was a great exercise. There are worse things than having your preferences validated. I think I’ll be a little sharper in my E46 stick RWD wagon search. I love the 530i, but it’s always good to have an eye toward what you think will come next.—Rob Siegel

Rob’s new book, Just Needs a Recharge: The Hack MechanicTM Guide to Vintage Air Conditioning, is available here on Amazon. His previous book Ran When Parked is available here. Or you can order personally inscribed copies of all of his books through Rob’s website: www.robsiegel.com.





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