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E39 540i Differential Upgrade - Custom Options

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Changing the rear gearing on your 540i is one of the best performance upgrades you can make. The shorter gearing will help accelerate the car quicker by placing the engine in a stronger part of the power band for any given speed. Being in that 'meatier' part of the power band means more torque is available at the wheels. And there is almost no downside!

The stock 540i has either a 2.81 or 3.15 final drive ratio. Both are relatively tall (numerically low) because of the 540's torque output and 6-speed transmission. But using a shorter gear (numerically higher) will take advantage of that torque output even more and give dramatically better acceleration. We rebuild the stock BMW diff with the new gear ratio, new bearings, and new seals. So not only do you get a performance improvement but also a rebuild of a potentially troublesome component. We can also add a limited-slip unit to get better traction.

By changing the gearing, you are changing the speed in relation to engine RPM. The 540i begins to make most of its torque at 2,700 RPM. With the original gear ratio, 25 MPH is 2nd gear at 2,500 RPM. With shorter 3.46 gearing at 25 MPH in 2nd you're now at 3,000 RPM - much deeper into the power band! At 70 MPH in 6th you are right at the start of the torque curve, which means you get much more thrust and maybe no need to downshift! Here are more examples of the gearing and speed differences -

2002 E39 540i, 6-speed manual, 255/40-17" rear tires
(click to expand)
Gear RatioGearSpeedRPM
40 MPH in 4th
2.814th38 MPH1,750 RPM
3.154th38 MPH2,000 RPM
3.464th39 MPH2,250 RPM
3.624th38 MPH2,250 RPM
70 MPH Cruise
2.816th72 MPH2,250 RPM
3.156th71 MPH2,500 RPM
3.466th71 MPH2,750 RPM
3.626th68 MPH2,750 RPM
5th Gear Speed at Redline
2.815th159 MPH6,000 RPM
3.155th142 MPH6,000 RPM
3.465th129 MPH6,000 RPM
3.625th123 MPH6,000 RPM
Why 5th? Because 6th does not have the mechanical advantage to get past wind resistance at these speeds - it is more of a cruise/overdrive gear. Using 5th for comparison purposes is much more relevant than having to take into account wind direction, resistance, grade, elevation, tire sizing, etc. These numbers are for comparisons among gear ratios only, not to determine what your 540 will top out at.

Limited Slip Options The 540i did not come from BMW with a limited-slip differential (posi-traction). Instead, they relied on the throttle electronics and/or brake application to limit wheelspin. The problem with this system is that as soon as it detects wheelspin the electronics cut engine power first. On later models with DSC the brakes will also be applied to the spinning wheel. And without limited-slip (an 'open' diff) it means that power is really only being directed to one wheel (not both rear wheels) - the infamous 'One Tire Fire'. Lifting the inside wheel in a corner can result in useless wheel spin, then engine power cutoff, which is futile when trying accelerate out of a corner. Instead, a limited slip differential (LSD) will transfer power from the inside to the outside wheel that has a lot more traction. We can also vary how much torque is transferred (the 'lock-up') so that you can still transfer torque and get some wheelspin at the same time (great for drifting/autocross!).

Core Charge. If we are building a diff from our own stock a refundable core charge will apply until we get your original diff back. You have a maximum of 30 days from the time you receive the diff to send it back us for a refund. Click here for more detail and explanation of the core charge.

FAQ: For a full FAQ on the custom diff process, click here.

This item fits the following BMWs:
1997-2003 E39 BMW 540i

Loading Kit Configurator

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Kit Configurator

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Add a limited slip unit?

Add REM bearing polish?

Add REM ring & pinion polish?

Core Charge

Select a diff ratio:

Base Differential

Output Flange Size(Vehicle option S204A)

This Part Fits the Following BMWs

Make Model Submodel Engine
BMW E39 540i M62 4.4L
*The above product applications have been written by Turner Motorsport. All warranties, product application, fitment, and performance are the responsibility of Turner Motorsport. For additional information see the terms of use.
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