Introduced in 1995 to be first sold in 1996, the BMW Z3 was the German marque's first foray into mass-produced roadsters. The first Z3's rolled off the production floor 40 years after the introduction of BMW's first roadster known as the 507, a beautiful classic drop-top that was poised to help give BMW some strength in the US market, but that ended up causing substantial losses for the company - pushing it to the brink of bankruptcy. A sales leader it was not, but the 507 was truly a piece of art, with visual cues from this classic sports car being borrowed from and refined in all later BMW "Z" incarnations, especially including the Z8. A testament to the respect the 507 garnered, of the 252 507's produced, over 200 of them still exist today.
The 507's production ended in 1959 and it wasn't until 1985 that a BMW factory would produce another convertible. This time it would not be a one-off design but rather derived from the 3 series of the time, the E30. The convertible E30 went on to sell very well and drawing on the success of this model BMW started considering developing a roadster. They created a prototype to show the press and after strong initial reactions the three-year development phase began. In 1987 they released the Z1, an innovative design featuring drop-down doors and plastic body panels that were all completely removable. It was used as a test bed of sorts for new technology, being the first BMW with HID headlights, underbody aerodynamics and the integrated roll bar system used on many 3 series convertibles that followed. The chassis was also continuously seam-welded, giving a claimed 25% increase in stiffness, a process later used on sporty variants of various BMW's.
Despite not being sold in North America, demand was very strong with BMW claiming they had 5,000 orders before production began and in 1988 claiming they had 35,000 outstanding orders. However they were only able to produce 10-20 units a day and only 8,000 of these Z1's were produced during it's 5 year production run, with nearly 6,500 of those sales occurring in Germany and over half of the entire production run being made in 1990.
Though largely considered a parts-bin car, the Z1 was actually mostly a standalone product. The Z1 did borrow the E30 325i's and 325ix's engine and 5 speed transmission as well as some front suspension components, but besides these parts and various switchgear the car was made of entirely bespoke parts. The Z1 also marked BMW's first usage of the Z-link suspension, which for the record is not where the "Z" in "Z3" comes from - rather, the "Z" stands for "Zukunft" which is the German word for future. And looking into the future a bit themselves BMW developed a Z1 coupe concept (pictured below) which is a clear inspiration for the shape of the later Z3 coupe. And if you ask me, the two-tone Z3M seats look quite reminiscent of the Z1 two-tone seats (pictured above).
Released in 1990 the Mazda Miata took the automotive world by storm when demand for the cheap, peppy roadsters exceeded all expectations. With the Z1's production ending the decision was made to look into the feasibility of producing a new roadster to try to compete with the Miata. After noting that a majority of the Miata's sales were in the US, BMW made the decision to produce the Z3 in their new US factory in Spartanburg, SC. Development of the Z3 started in 1991 under Dr. Burkhard Göschel, with designer Joji Nagashima penning the design in 1992. Nagashima also designed the E39, E90 and the E36 which the Z3 is based on. The decision was made to base the Z3 on the existing E36 compact mostly due to financial limitations stemming from the fact that BMW didn't expect the Z3 to sell very many units, thus they wanted to limit their research and design budget for the project. Developing a unique chassis for a car with low projected sales figures that was supposed to compete with the very affordable Mazda didn't make sense, which led to the decision to have the Z3 share the E36 compact chassis.
First announced in 1995 and first seen in the box office hit Goldeneye the Z3 was an immediate sales success. Over 15,000 Z3's had been spoken for by the time the car started rolling off the assembly line. In 1997 the narrow-fender 4 cylinder Z3's were joined by their fat-hipped 6 cylinder siblings, upping the power under that long hood from 140hp in 1.9 guise to 193hp when propelled by the 2.8 M52 I6 engine.
Unveiled at the 1997 Frankfurt motor show, the story behind the Z3 coupe is a fascincating one. The story goes that a group of engineers, including head of development Dr. Göschel, spent time after hours at the BMW factory modifying a Z3 in order to increase the stiffness of the chassis. The car almost didn't see the light of day as it was very hard to get approved by the Board of Directors. Eventually, after conceding that it will share almost all parts with the roadster - everything forward of the A pillars and most everything below the beltline - it was given the greenlight for production and 1998 saw the roadsters being joined by their now cult-classic brother, the Z3 coupe. Mistakenly called ugly by some, the coupes featured a unique shooting brake body style, giving increased practicality to the two-seater Z3.
September 1998 saw the M52TU replace the M52 and in April 1999 the cars received a facelift in which non-M roadsters received an updated rear-end look and all models received updated electronics and technology including dual-stage airbags and an improved traction control system. Available engine options also changed a bit, with the 4 cylinders being discontinued in the US although outside of the US the facelift models were available with 4 cylinders until the end of production, during which time they shared the widebody facelift body with the larger 6 cylinder engine variants.
There were some compromises made on these later years though, with some of these changes suspected to have been made to keep the then-5-year-old Z3 from competing with the brand new at the time M3. For 01 and 02 Z3M's, Sport mode was coded into the DME and there is a light and spot for it in the gauge cluster, but the actual button was notably absent - giving owners no way to adjust the throttle response which was available on all other M's at the time including the E46 M3. The differential ratio was also changed, the 98-00 Z3M's received a 3.23 rear-end ratio, whereas the S54's received a 3.15 despite the S54 having a higher redline than the outgoing S52. This negatively affected the acceleration feel of the car and neutered it's performance, leaving it - on paper at least - remarkably close to the outgoing S52 US model.