Physically fitting the M54 in the E36 is very easy. An M54 from a Z3 will bolt into an E36 as-is. An E39 M54 engine will need engine mounts swapped to E36 mounts - the E39 oil pan fits on the E36 subframe (I am using an E39 engine with E39 oil pan). Note - you can not swap to the S52/M52 oil pan even if you want to, the pickup tube design is different and they are not compatible. If you are using an E46, X3 or X5 M54, you will need to swap engine mounts to E36 and oil pan to E39 or Z3 M54. The 2.5 and 3.0 use the same oil pan, so it shouldn't be hard to source one. Any transmission that bolts to an E36 6 cylinder engine will bolt to an M54. I am using the stock ZF 320Z 5 speed from my E36 M3.
Electrical gets a little more complicated but can be done yourself or with an adapter harness
I did make an effort to "hide" the wiring modifications as much as possible. The M54 will only have one of these round ports filled, so I decided to remove the extraneous ones. I labelled all the pins, which harness they went to, de-pinned them and heat shrunk them individually, then tucked the extra wire out of the way
Because I wanted factory integration and all functions like A/C working, I did have to run a few additional pins. I also had to run a few wires through the firewall - some for the gauge cluster and some for the pedal. I ran them in through the hole the throttle cable originally passed through and used a protective tape around them where they go through the firewall, to prevent fraying over time
The power supply on the M54 is a little different than the E36's - the M54 basically runs all the positive power to the starter then the rest of the engine. Below is the main engine supply cable - a thicker gauge than required, but I figured with cable, thicker is safer, especially with how much power will be flowing through it. I ended up using a battery supply cable from an old parts car, and a new end terminal
Wiring the transmission reverse sensor. Red pin goes to 12v, other goes to the DME harness. Very simple
I also labelled and removed the automatic transmission sub-harness from the M54 engine harness. I am also not running post-cat O2's, so those were also removed
This is the pedal harness... the pins pulled out which doesn't matter. This is the E46 style pedal harness. I'm actually going to be using the one from my Z3 which has a different setup and harness
One of the last things to do and possibly one of the least understood is the Z3 gauge cluster. On the M52TU, M54 and S54 engines, certain inputs are handled through the gauge cluster. Without the correct gauge cluster and corresponding wiring, the A/C will not work, temp gauge will not work as well as a few other things. I customized my E36 M3 cluster with a Z3 M52TU cluster to make a "hybrid" cluster. It has the chrome rings, warning light strip (needed for the "EML" warning) tachometer and electronics board of the Z3 with the speedometer (with red line at 55), M badge and red needles of the M3 cluster. It was then re-coded to function in my car, with my correct VIN and mileage
Here is the M cluster, with the Z3 chrome rings being test fitted
Then, some disassembly... (it was around Thanksgiving when I did thi
And finally, the finished cluster! You can see the old tachometer face in the background. The M54 used dashed lines, instead of the diagonal line the M52 engines got.
And installed
Mmm. looks nice!