Wagon, touring, estate–interchangeable names for vehicles with a roof that spans beyond the rear passengers and over the cargo area with liftgate access at the back. Over the years, some manufacturers have teased performance wagons as concepts, but never produced them for consumers (cool to see, but not so great if one is your dream vehicle). This was the case for Kyle and Maggie Baca, so they took it upon themselves to build their own E46 M3 Touring.

I was first introduced to the Baca’s proper-roof-length E46 M3 Touring at the National Capital Chapter (NCC) Deutsche Marque Concours (DMC) event in May of this year, although I didn’t know who owned it at the time. In addition to enjoying the DMC event with my four-year-old son, I was busy taking photos of the cars in attendance. I probably walked by the Baca’s E46 a few times thinking, “I really like the color on that M3 coupe.” It was only until later, when a friend asked, “Did you see that E46 M3 wagon?” that I realized I had only been paying attention to the front half of the car.

What can I say? I was distracted. Four-year olds require a certain amount of attention–especially at a concours event.

After returning to appreciate both the front and back halves of the custom M3 Touring build, complete with proper E46 M3 bodywork, interior, S54 engine, and manual transmission, I immediately thought of BMW’s first M3 Touring. No, not the G81 that BMW recently unveiled at the Goodwood Festival in June–I’m talking about the E46 M3 Touring Concept that they used to tease the world in 2000. In my eyes it’s the perfect vehicle.

While I couldn’t find the M3’s owners to speak with at the 2022 DMC, I wanted to know more. In an effort to make contact, I harnessed the powers of the Internet and posted some photos that I had taken of the long-roof E46 at the DMC event to an E46 M3 Touring Facebook group. Within a few hours Austin Sera replied, tagging Kyle Baca’s Facebook account (more on Austin in a bit).

I must apologize: I wasn’t fully truthful earlier. As it turns out, this wasn’t the first time that I had seen Kyle and Maggie Baca’s wagon. After chatting with Kyle via email, I realized I had also seen this car (pre-M3 bodywork and wearing a different color) at the 2019 DMC event three years earlier!

It all came rushing back as I recalled speaking with Kyle at the event and learning about the components he used to complete the S54 engine and all-wheel-drive drivetrain swap. (S54 is the code for the last naturally aspirated 3.2-liter inline-six M engine that came in production E46 M3s, late-model Z3 M coupes, and Z4 M roadsters and coupes, producing 333 horsepower.)

With introductions re-made, it was time to get the full story. Kyle, Maggie, and their two children, Caroline and Nicholas, live in Virginia, just outside of Washington, DC. They are BMW enthusiasts and enjoy modifying their vehicles. Kyle commented, “What has always drawn Maggie and me to the marque is the balance between utility, sportiness, and ride quality.” Their history of modified BMW wagons includes a 2006 530i xDrive, a 2007 328i xDrive, a five-speed manual 528i, a 2010 535i xDrive, and of course this beast of an E46 M3 Touring.

What was the inspiration behind the Baca’s M3 build? Kyle recalled, “In July 2018, we saw a 2001 325xi with an S54 engine swap and all-wheel drive listed by a specialty dealer, Glen Shelly, in Colorado. It was built by a BMW master tech and a detailed spec was laid out on the site. The car looked beautiful, but it had over 278,000 miles. This got us thinking, ‘What if…?’”

That question led to a list of high-level goals: S54-power with 8,000 rpm to play with, E46 styling, the practicality of a wagon, all-wheel drive, and, as Kyle puts it, “all-metal factory E46 M3 bodywork for the icing on the cake.”

To turn their vision into reality, Kyle dug in and began an online research project. He said, “I reached out to the only other person I could find that had taken on the challenge of building an all-wheel-drive S54 drivetrain. After chatting back and forth on the forums, he gave me his number, and it turns out that not only was he local, but we had already talked about BMWs, swapped parts over the years, and have lots of the same BMW friends. It was none other than BMW guru Austin Sera.”

With Sera’s parts-shopping list in hand, in August of 2018 Kyle and Maggie started a nationwide search for parts, which included the foundation for the project: an E46 325xi Touring with a five-speed manual transmission. It’s a rare combination with production numbers estimated to be in the low hundreds, but according to Kyle, “This is the only touring chassis that will accommodate the 330xi six-speed manual transmission.”

They found a suitable donor in December 2018—less than four miles from their home! The project’s base would be a manual 2004 325xi Touring with only 114,000 miles on the odometer.

Building blocks began to fall into place as parts were tracked down: a 76,000-mile S54 engine, a 64,000-mile 330xi six-speed manual transmission, and X3 differentials to change the gear ratio to 3.91. The Bacas had reached out to a number of local shops and individuals to help assemble the parts, but as Kyle put it, “Ultimately, no one wanted the job. They were wary of the scale and feasibility of the modifications being presented, and doubtful about whether my parts would actually integrate or were a complete set.”  To further complicate things, the Bacas were selling their home, had accepted an offer, and were closing in five weeks.

Kyle said, “It’s now or never,” so he took a sabbatical from his day job and began working seven days a week in his garage, building their dream Touring. Under the hood, the engine was refreshed with ACL rod bearings and all-new seals, except for the head gasket. The assembly VANOS was overhauled with upgraded parts, and the chain tensioners were replaced. A 330xi oil pan was used in conjunction with an S52 windage tray and M50 oil pump. The cooling system, including radiator, was replaced with factory E46 M3 parts up to the task of keeping the S54 happy. The fuel system was upgraded to factory M3 parts. A slew of while-you’re-in-there maintenance parts were replaced or upgraded, such as belts, hoses, sensors, and motor mounts.

Kyle Baca makes progress on the drivetrain swap in his garage. [Photo courtesy of Kyle Baca.]

Modifications and updates didn’t stop there. The steering was modified and updated to adapt the factory E46 M3’s steering system to the xi platform. Drivetrain bushings and bearings were replaced. The front driveshafts were replaced with new GKN units. The front control arms received stronger ball joints. The brakes were upgraded.  The list goes on and on.

In the suspension department, Kyle said, “The stock suspension was replaced with KW V1 coil-overs, and all suspension bushings were replaced. While the wagon is not known to be susceptible to subframe issues, the subframe was reinforced with TMS plates. The rear subframe was custom-built with reinforced rear sway-bar mounts and then powder-coated. The differential bushings were replaced. Custom rear sway-bar drop links were fabricated by Road Race Technologies, who also provided an alignment to aggressive street specs.”

This all sounds like a lot of work—because it was. Kyle reflected, “I looked forward to each day out there in the garage, but it was wearing on my body, and borderline not healthy to be channeling this much obsession.” Fortunately, after 280 hours of work, one day before the movers came, Kyle fired up the “332xiT” for the first time and it left the Baca’s garage under its own power—332 because of this 3 Series’ new 3.2-liter oil-pumping heart–you know, a naming convention reminiscent of the days when BMW model numbers actually reflected the model and engine displacement.

The S54 looks right at home, complete with proper OEM shrouds and clips.

To complete the first phase of the project, before digging into more substantial body work, the Bacas had E46 ZHP bumpers painted and installed. Shortly thereafter, they took it to the 2019 DMC, which happens to be the first time I saw the car—albeit its original color and shape.

The interior was next on the project list. In addition to the imported full-leather 330i Touring interior, M3 front seats were installed. A recovered black headliner and A, B, and C-pillar covers were also installed. Kyle enlisted Austin Sera to help with electrical work, such as making the M3 seat functions fully operational, and integrating an M3 dash control panel.

After some more time in the car, some items had to be readdressed. Kyle didn’t like the clutch chatter from the lightweight flywheel, so he took it to RRT, who installed an OEM LUK clutch kit.

This is as M3 as an E46 Touring interior gets!

The last major piece of this project was the proper E46 M3 bodywork. Kyle said that similar to the mechanical portion of this project, finding a shop to do the body work was a challenge. His friend and fellow Touring enthusiast Stuart Moulton came through with a recommendation: Mid-Atlantic Customs. Kyle said, “The car went to Mid-Atlantic Customs for fabrication and paint in early 2021. OEM components were sourced including an M3 hood, M3 fenders, M3 quarter panels, M3 side skirts, M3 corner lights, M3 side mirrors, M3 headlights, and an M3 CSL front bumper. All associated hardware, fender liners, and ducting was sourced from OEM M3.”

This wasn’t simply a bolt-on affair. There was cutting and welding involved on all four corners of the car. And don’t forget what has to happen to the trunk floor to make the rear E46 M3 rear exhaust section fit properly!

When it came time to pick a color, Kyle said, “The decision to change color was rather difficult for Maggie and me, but we ultimately decided that while the change will ultimately be lost on most, and disliked by purists, we wanted something subtly more modern while keeping with a BMW color for an OEM touch.” They chose Grigio Telesto, which happens to be an M3 Individual color.

Mid-Atlantic Customs performed metalwork on the Bacas’ E46 M3 Touring. [Photos courtesy of Kyle Baca.]

To put the proverbial bow on this project, Kyle took the M3 Touring back to Austin Sera to button up the remaining items, which he did. That brings us to the present: A couple of weeks ago I had the pleasure of meeting with Kyle, Maggie, and their kids to photograph their awesome one-off project.

I heard the Baca’s M3 Touring before I saw it. The crisp, precise exhaust note cut through the cool Sunday morning air just after sunrise. This was the first time I had heard the car run, and it didn’t disappoint. For our photo-shoot location, I chose a terrace with a mix of old-school pavers and a new-school industrial-style building—perfect for this Grigio Telesto E46, which now straddles the classic and modern boundary. 

Kyle, Maggie, Caroline, and Nicholas stand behind their E46 M3 Touring.

While I took photos of this amazing Touring, Kyle and I passed the time chatting about work, hobbies, and of course cars. Come to find out we have similar vehicle histories. and children are close in age and have similar interests. We headed back to Kyle’s house to meet with Maggie, Caroline, and Nicholas for a few family photos in front of this performance family hauler. Naturally, the highway portion of the drive called for some rolling shots. Hearing the S54’s symphony of intake and exhaust sounds as we cruised on highways and side streets was a real treat.

Rollers, anyone?

After such an intensive project, was it worth it? After seeing this car up close and hearing Kyle’s story, I definitely think so! But then again, I didn’t have to do any of the work. For me, the Bacas’ E46 M3 Touring achieves the trifecta of performance, utility, and style; it’s the perfect one-car solution.

Kyle summed it up nicely when he said, “The final product has exceeded our expectations, and the soundtrack is simply addictive. Oh, and the kids really dig the car.  No compromises!” –Mike Bevels



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