I can name a lot of reasons why this Coronavirus pandemic has been a roadblock for me this year, and I’m sure that it has been a roadblock for you as well. I have been quarantined for nearly two months at this point, but I finally found something to distract me from the boredom of house-sitting.
That something is a beat-up 2004 E46 325i, and when I say beat up I mean that I bought the car for $2,500 with only 130,000 miles on it. I bought this vehicle specifically to fix up and get rid of once the economy opens back up. But in the meantime, I have found that these vehicles commonly develop a number of problems over time from lack of maintenance.
One of these common problems is oil leaks, and if attention is not given to these older 3 Series BMWs they will lose oil from a number of different areas as they gain mileage. In this article, I am going to discuss what I found to be the most common oil leaks on a BMW E46, and maintenance tips for mitigating these leaks.
Valve Cover Gasket 
These are ridiculously common, my 325i valve cover gasket was leaking oil when I bought the vehicle. Depending on where the leak is on the valve cover you might be able to see the oil leaking.
Although these leaks are extremely common, they usually are not very serious and valve cover gaskets can be replaced in under an hour by a DIYer with very little experience. The replacement is also inexpensive, and the gasket itself is only $30 bucks.
That being said, complications can arise from a valve cover leak if the leak is bad enough for oil to drip onto the exhaust manifold. The oil will burn and can generate smoke coming up from the exhaust manifold. At that point it is time to replace the gasket, because it has become a fire hazard.
Oil Filter Housing Gasket
This is also an extremely common oil leak source on BMW E46s. Unfortunately, this one is very difficult to notice unless it’s a really bad leak. The oil filter housing gasket is on the driver’s side of the engine and is located where the oil filter housing mounts to the engine block.
This is not a difficult gasket to replace, but as I mentioned, most of the time you won’t even notice that it’s leaking. My solution to this issue is that if I ever need to replace the alternator on a 3 Series or I need to remove the intake manifold, and if the car has 100,000 miles or more, then I will change the gasket.
Power Steering Hoses
Look I have said it before and I will say it again – there is no such things as a 3 Series power steering system that does not leak at least a little transmission fluid from the rubber lines. Even when everything is well sealed, these lines still “weep” a little fluid. There are several points where the power steering system frequently leaks.
One area is at the hose clamps, and most people will simply replace the clamp if the hoses are in decent condition.
Another area of concern is the power steering reservoir itself. The reservoir cap o-ring often breaks down and will cause fluid to leak from the top of the reservoir.
Oil Separator Drain Tube 
It is almost safe to say that if your 3 Series has more than 100,000 miles on it than someone has replaced your CCV system by now. The E46 CCV is more complex than the E36 with more hoses. Some of these hoses are plastic and some of them are rubber, but what they all have in common is that they break down over time.
Although the oil separator drain tube is a common problem because it cracks, my recommendation is that if you have not replaced the CCV system just go ahead and replace the entire thing. The CCV is one of those parts that you try and replace before it breaks, so you might as well get that, and the associated oil hoses out of the way.
Oil Pan & Rear Main Seal Leak
I am mentioning these two leaks together because they are not nearly as common on BMWs as they are on other vehicles. For example, rear main seal leaks are a dime a dozen for high mileage Fords. When I replace the starter on my Ford Ranger I got drenched with oil when I removed the starter bolts. Why? Because the Ranger had a massive rear main seal leak.
BMW E46s on the other hand do not frequently have these issues, and I have never seen either one of these on an E46 with below 150,000 miles.
That being said, both of these problems do happen from time to time. Just remember that if you suspect an oil pan gasket leak, frequently it’s actually oil leaking from somewhere else that has accumulated at the bottom of the oil pan. Try cleaning the oily parts of the engine before you make a decision that your pan is leaking because the oil pan gasket is a major pain in the a$$ if you have to replace it.
Oil Leak Maintenance Tips
I have found that the best way to avoid major oil leaks is to adhere to BMWs oil change interval schedule and practice preventative maintenance. Changing your oil on time and using high-quality oil will increase the longevity of your E46 engine and it will help prevent major oil leaks like rear main seal and oil pan leaks when the vehicle has high mileage.
Preventive maintenance goes toward preventing problems like blown CCV units from ever occurring. It makes your life easier and extends the life of your engine.
Conclusion
I want to conclude by saying that I believe that BMW E46s are an excellent 3 Series generation, although they do have a couple of quirks, overall they are excellent vehicles. I hope this information about BMW E46 oil leaks has helped you!