Why Your E39 M5 Demands Differential and Drivetrain Upgrades

The BMW E39 M5 is rightfully celebrated for its naturally aspirated S62 V8 and near-perfect chassis balance. Yet even this icon of German engineering has known weak points in its drivetrain. The stock differential can become vague under hard throttle, the factory driveshaft carries unnecessary rotating mass, and after two decades the rubber mounts have likely deteriorated. Addressing these areas not only sharpens throttle response and cornering grip but also prevents premature wear that can sideline the car for costly repairs. Whether you track your M5, enjoy weekend canyon drives, or simply want a more responsive daily driver, targeted upgrades to the differential and drivetrain deliver the most tangible improvements for both performance and long-term reliability.

Limited Slip Differential Upgrades for the E39 M5

The Factory Open Differential and Its Limitations

The E39 M5 left the factory with an open differential. While this offers smooth street manners and predictable behavior in low traction, it quickly becomes a liability during spirited driving. When one wheel loses grip, power is sent to the spinning wheel, wasting torque and dulling acceleration out of corners. An open diff also hampers the car’s ability to put down power in tight, low-speed turns, especially with the S62’s abundant low-end torque.

Upgraded Limited Slip Differential Options

Swapping to a limited slip differential (LSD) is the single most transformative performance upgrade for the E39 M5’s drivetrain. An LSD sends torque to the wheel with the most grip, improving traction on corner exit, reducing inside wheel spin in hairpins, and making the car more predictable at the limit.

  • Mechanical LSDs (clutch-type): Companies like Drexler and 3.45 Motorsport offer built differentials that use clutch packs to manage torque distribution. These are rebuildable and allow adjustment of breakaway torque. They provide aggressive lock-up ideal for track use but can produce some low-speed chatter in city driving.
  • Helical (gear-type) LSDs: Quaife and Wavetrac differentials use helical gears instead of clutches. They offer smooth, progressive lock-up that works well for street and occasional track use. Wavetrac’s patented design even maintains preload when one wheel lifts under cornering—a known issue with some helical units.
  • Electronic LSDs: While not a mechanical swap, the factory DSC can be tuned via software like MAST Performance or ESS Tuning to mimic an LSD by braking the spinning wheel. This is the least intrusive option but still lacks the immediate response of a true mechanical LSD.

For most owners, a Quaife or Wavetrac helical LSD offers the best balance of cost, durability, and street manners. If you campaign the car in competitive track events or drift, a Drexler clutch-type unit is worth the premium.

Differential Bushings and Mounts

Even with a new LSD, the stock rubber differential bushings introduce flex that dulls throttle response and allows the diff to move under load. Upgraded polyurethane or solid aluminum bushings drastically reduce this slop, improving rear-end stability during hard acceleration and braking.

  • Powerflex Purple Series bushings offer a significant stiffness increase without the harshness of full aluminum.
  • Turner Motorsport solid aluminum front diff bushing (the main bushing that houses the diff pin) eliminates all movement. This is a popular choice among track owners.
  • AKG Motorsport offers a full set of polyurethane rear subframe and differential bushings. Note that stiffening the diff mounts can increase road noise slightly, but the improvement in chassis feel is well worth it for enthusiasts.

Changing the Final Drive Ratio

Replacing the ring and pinion gears changes the car’s acceleration characteristics. The stock E39 M5 has a 3.15:1 ratio (manual) or 2.81:1 (SMG). Moving to a shorter (numerically higher) ratio like 3.38:1, 3.46:1, or even 3.64:1 will make each gear pull harder but reduce top speed per gear and slightly increase highway RPMs.

  • 3.38:1 (from BMW Z3M or certain E36 M3s) is a popular mild upgrade that doesn’t require recalibrating the speedometer drastically.
  • 3.46:1 or 3.64:1 are more aggressive, typically used on track-focused cars with upgraded power. These require a speedometer correction (via a speed sensor ratio adapter or coding).

A ratio change can make the E39 M5 feel significantly quicker in the first three gears, but it also raises cruising RPM. Consider tire diameter and your driving style before committing. Many aftermarket differential builders can install your chosen ratio along with an LSD in a single core exchange.

Driveshaft Upgrades

The Case for a Lightweight Driveshaft

The E39 M5’s two-piece steel driveshaft is heavy and includes a center support bearing that can wear out, causing vibrations. A lightweight one-piece driveshaft made of aluminum or carbon fiber reduces the moment of inertia that the engine must spin up during each gear change. The result is noticeably quicker revving and more immediate throttle blips for heel-and-toe downshifts.

Aluminum vs. Carbon Fiber

  • Aluminum driveshafts: Offered by Driveshaft Shop and DSS, these are significantly lighter than steel and offer a good balance of cost and performance. They are strong enough for stock or mildly built S62 engines. Aluminum does not require a center bearing, simplifying installation.
  • Carbon fiber driveshafts: Companies like The Driveshaft Shop and PT Racing produce carbon units that are the lightest option and dampen vibrations better than aluminum. Carbon is ideal if you are chasing maximum weight reduction or have a built engine with over 500 hp. The downside is higher cost and potential for damage if scraped or hit.

When installing a one-piece shaft, you will need to remove the factory center support bearing and crossmember. Some shafts require a specific yoke on the transmission side (G420 or G280). Ensure compatibility with your transmission type. Also, the tunnel clearance should be checked; some shafts require clearancing the heat shield or slight floor pan modifications.

Guibo and Center Support Bearing

Even if you keep the stock driveshaft, replacing the rubber guibo (flex disc) and center support bearing every 60,000-80,000 miles is essential for driveline smoothness. Upgrade to a high-quality replacement from Exedy or Lemförder to reduce play and vibrations. If you are doing a one-piece shaft, these parts are removed entirely, but you still need to ensure the transmission output flange is in good condition.

Transmission Enhancements for Improved Shifting

Short Shifter Kits

The factory shift linkage has a long throw and is somewhat vague, especially compared to modern sports cars. A short shifter reduces the lever travel and provides a more precise gate feel. The UUC Motorwerks EVO3 Short Shifter is a well-known upgrade for the E39 M5, offering adjustable height and throw reduction up to 35%. The B&M Short Shift Kit is another popular choice that is slightly more aggressive. Both kits come with upgraded shift carrier bushings that eliminate the loose feel of the worn OEM rubber bushings.

Detent Pin Replacement and Shifter Rebuild

After high mileage, the transmission detents can wear, leading to notchy shifting, difficulty engaging gears, or popping out of gear. Replacing the detent pin kit (available from BimmerWorld or FCP Euro) restores crisp shifter feel. While doing this, also replace the shifter lever bushing and the plastic pivot seat—these parts are cheap and dramatically improve shift quality.

Clutch and Flywheel Upgrade

If you are upgrading the engine’s power output (e.g., with a supercharger or headers and tune), the stock clutch may slip under hard acceleration. A Stage 2 or Stage 3 clutch kit from Southbend Clutch, Sachs Performance, or UUC Motorwerks can handle increased torque. Pairing the clutch with a lightweight single-mass flywheel reduces rotational inertia, allowing the engine to rev faster. Be aware that a single-mass flywheel can introduce some gear rattle at idle, which is common with such setups. If you prefer a quieter cabin, a sprung-hub dual-mass flywheel replacement (like LUK) is a better choice, though it adds weight.

Axles and Half-Shafts

The E39 M5’s rear axles are robust but can develop CV joint wear, especially if the car has been lowered or track-driven. Upgraded axles from Driveshaft Shop or Axle Exchange feature stronger CV joints and larger diameter shafts designed to handle high torque without deflection. If you are doing an LSD upgrade or have a supercharged engine, upgrading the axles is a wise preventive measure. Also, replace the axle boots and grease every time you service the differential. If you notice clicking on tight turns, the outer CV joint needs replacement.

Fluids and Regular Maintenance

Differential Fluid

High-quality differential fluid is critical for the life of the LSD. Clutch-type LSDs require a specific friction modifier; without it, you may experience chatter or premature clutch wear. Helical LSDs use a standard synthetic gear oil but will also benefit from a quality choice. Recommended fluids:

  • Motul Gear 300 LS (full synthetic with limited slip additives) works well for both helical and clutch-type diffs.
  • Red Line 75W-90 NS (non-slip) or 75W-90 GL-5 with appropriate friction modifier.
  • BMW Synthetic Differential Fluid if you want to stay OEM-spec. Change the fluid every 30,000 miles or after each track season.

Transmission and Drivetrain Care

The manual transmission in the E39 M5 (Getrag G420 or SMG versions) should be serviced with Red Line MTL, Motul Gear 300, or Royal Purple Synchromax. Avoid standard GL-5 gear oil as it can corrode brass synchros. Change transmission fluid every 30,000-50,000 miles. Also, inspect the transmission mounts—they sag over time, allowing the engine/transmission to move and strain the driveshaft. Rogue Engineering polyurethane transmission mounts provide firmer location with minimal added vibration.

Putting It All Together: A Suggested Upgrade Path

Budget and goals vary, so here is a logical progression for upgrading your E39 M5’s differential and drivetrain:

  1. Start with the LSD. A Quaife helical unit is the single best upgrade. Pair it with new differential bushings (Powerflex or Turner aluminum front bushing). This alone transforms the car’s cornering ability.
  2. Refine the shifting. Install a short shifter, replace detents, and swap out the original shift carrier bushings. A lightweight flywheel and clutch upgrade can wait until the clutch wears out, but if you are already in there, it’s a good time.
  3. Lighten the rotating mass. A one-piece aluminum driveshaft improves response and deletes the center bearing failure point. This is more noticeable than you might expect.
  4. Protect the system. Replace transmission mounts, inspect axles, and upgrade fluids to high-performance synthetics. Address any worn CV boots immediately.
  5. Only then consider a ratio change. If you have increased power or want more aggressive gearing for the track, a 3.38:1 or 3.46:1 swap with an LSD will give you a truly quick car.

Where to Buy and What to Avoid

When sourcing parts, prioritize reputable BMW specialists and performance shops:

  • Turner Motorsport – Extensive inventory of E39 M5 driveline upgrades, including LSD options and bushings.
  • BimmerWorld – Known for track-proven parts like Sway Bars, but they also carry LSDs and transmission components.
  • ECS Tuning – Good source for OEM replacement parts, driveshafts, and a wide selection of fluid brands.
  • FCP Euro – Offers lifetime warranty on many parts including differential rebuild kits and axles.
  • AKG Motorsport – Specializes in subframe and differential mounting solutions for BMWs.

Avoid no-name or generic differential parts from auction sites. The E39 M5 uses specific internals that require precise calibration. A poorly rebuilt diff will whine or fail. Always buy a core exchange unit from a company that knows the M5 platform.

Conclusion

The E39 M5 remains a benchmark for its era, but its differential and drivetrain respond exceptionally well to targeted upgrades. Installing a limited slip differential, stiffening the diff mounts, reducing rotating mass with a lightweight driveshaft, and tightening the shift linkage bring the car closer to modern standards without sacrificing its soul. These upgrades also improve durability: a properly built LSD and fresh bushings eliminate many of the common weak points that lead to costly breakdowns. By investing in high-quality components and performing regular fluid changes, you will extend the life of your drivetrain and continue to enjoy the remarkable power delivery and handling balance that make the E39 M5 a legend.