How Canada got the M3 the U.S. always wanted

BMW fanatics have long disdained the North American–spec E36 M3 as a red-headed stepchild. While Europe got to savor the full BMW M experience, the E36 M3 shipped across the Atlantic was a shadow of itself—down on power, performance, and looks. Here, republished from 2017 in celebration of Canada Day, is the story of how BMW of Canada got the real deal. —Ed. 

In 1991 or ’92, Karl-Heinz Kalbfell came to the United States on a mission. As the boss of BMW Motorsport GmbH, his charge was to pitch the new E36-generation M3 to the U.S. market. It wasn’t an easy sell.

For starters, the original E30-generation M3 did not lay out a convincing framework. Today it’s revered as a collectible, with the best examples valued at around $165,000, but in the ‘90s it was an expensive, buzzy homologation special that most buyers just didn’t want.

“Both U.S. and Canadian dealers had [E30 M3s] on their lots that were over a year old,” Tom Plucinsky remembers. Back then, Plucinsky was product planning manager at BMW Canada. Today, he leads BMW Group’s product communications team in North America.

“In a good year, we sold 50 E30 M3s in Canada and then it dropped from there,” said Plucinsky.

The other problem for Kalbfell and the then-new second-generation M3 was that BMW Motorsport was largely an unknown entity in North America. The brand—these days called BMW M—didn’t have the recognition, brand equity, or reputation it currently enjoys.

Kalbfell’s meeting didn’t go well. BMW’s U.S. team didn’t want the E36 M3. “It was too expensive for them,” Plucinsky said.

On the way back to Munich, Kalbfell made a quick stop at BMW Canada, where he found a more receptive market.

Plucinsky thought there was an opportunity at hand, a reasonable business case. “We looked at a production run of the E30 and figured 50 [E36 M3s per year] was sustainable. We went back to [BMW] Motorsport and said we’re in.” He had no idea how hard his job was about to become.

Backchannels and Loopholes

The European-spec E36 M3, on sale in 1992, would eventually come to Canada, but the U.S. wouldn’t get it. What followed was a technical battle as much as a political one. Plucinsky and a handful of people at BMW Canada pushed this project through using backchannels, loopholes, and long hours.

“From one day to the next, it could’ve been over,” said Plucinsky. “Every day I was wondering when are we going to get the letter saying it’s off. The guys that helped me at BMW Canada, it was a labor of love for all of us. There was no budget for this. There was no marketing. All of a sudden a guy would show up and say, ‘I did a brochure, what do you think?’”

Usually, Canadian cars are based on U.S. models, but that wasn’t an option.

“At the time, you could certify a car using a Norwegian certification for Canada, as long as the volume was low,” Plucinsky remembered. So, that’s what BMW Canada did.

Some Canadian customers wanted their cars wired for a CD changer, but even that proved to be a nightmare. “The plant process [in Germany] wouldn’t allow it.” It seemed an insurmountable problem until, said, Plucinsky: “Our purchasing manager knew a guy at the Regensburg plant [where the cars would be built]. Our manager said, ‘I’m going see the guy in Germany next week and see if I can make it work.’ And, sure enough, the plant manager said he could do that for us without going through all the normal processes.”

In three months, 43 orders came in for the Canadian M3. “I thought there were some stragglers, so we made it 45,” Plucinsky said. It was sold as a 1994 model-year car with a retail price of $59,900 CDN. For that, you didn’t even get a radio.

“The idea,” he said, “was that we would make it as stripped out as possible so if you wanted to be pure and track it, you could.” If a customer ticked all the option boxes, including one for a full buffalo-leather interior, the price climbed to about $85,000.

The first 42 of 45 Canadian M3s arrived in January 1994 on a cold, wet day at the port in Halifax, Nova Scotia.

“When I went to Halifax we were battling snowstorms,” Plucinsky said. He and two others holed up at the port and went to work fitting Canadian daytime running lights and doing other odd jobs. Everything was difficult. Canadian regulations state the VIN must be visible through the window, but these windshields didn’t have cutouts for it. “That was solved when one of the employees had an E28 6 Series which had the VIN plate on the A-pillar. We checked with our compliance guys, and they said they could do that, so we did.”

When BMW’s U.S. headquarters got wind of what Canada was doing—thanks in part to an article by Autoweek’s Canadian correspondent at the time, Jeremy Sinek—they weren’t happy.

The Letter

BMW North America went back to BMW Motorsport and started working on a cheaper M3. They took out the Motorsport engine—a 3.0-liter inline-six which featured individual throttle bodies and continuously variable valve timing—and replaced it with a slightly tweaked version of the production 3.0-liter found in the 328i. (The widely accepted theory for the detuned engine is that emissions restrictions demanded it.) As a result, the U.S. M3 that would launch for the 1995 model year was down about 40 horsepower on the Canadian model’s 286 hp. The U.S. version was also destined for a warmed-over suspension, brakes, differential, and no flared bodywork.

The situation in Canada was tense. The fear, Plucinsky remembered, was that BMW Motorsport would have to cancel the Canadian M3 under pressure from BMW in the U.S.

All 45 cars made it to Canada, but the letter of doom finally came. Karl-Heinz Kalbfell was out, and the new head of BMW Motorsport said there would be no more Canadian M3s. After those 45 special cars, Canada sold the hamstrung U.S.-spec M3 instead.

“Through pressure and just the additional complexity…they just couldn’t do it for us anymore,” said Plucinsky.

Could something be pushed through BMW like this again, through backchannels, cunning, and sheer force of will? “I don’t think it could,” he said. “Homologation rules are more difficult now, worldwide. Our plants are larger and more structured. It used to be if you knew a few guys, you could maybe get something done. We’re a much larger company than we were, and there are advantages to that too.”

For years afterward, Plucinsky kept a list of buyers who wanted a Canadian M3. At one point there were 150 people on it. Canadians still love a good M car.

“Because I was responsible for the Canadian car, I was a little disparaging of the U.S. version, but it ended up being a huge success. It made BMW M in [America]. Without it, I don’t know we’d be where we’re at today with M. But I’m not completely convinced to this day that the U.S. would not have had the same success if the real [Euro-spec] engine were in the car.”

With only 45 built, will the Canadian M3 ever become collectible? Given that concours-quality E36 M3 Lightweights have traded hands for $100,000—and that they’re more common than the Euro-spec Canadian M3—Plucinsky thinks his labor of love might yet become a classic.