Since international rules required that at least 400 road cars be produced, BMW made 400 road and 39 racing versions of the M1 between 1979 and 1981. BMW contracted the design, fabrication and assembly of the M1; however, final testing and quality control were performed by BMW.

The new engine designation was M88/3. Since the 633 chassis was not originally designed to accommodate this engine, it was mounted at an unusual 30 degree angle. The Motorsport Division balanced the car with close ratio gearbox, an improved suspension, and servo assisted brakes on all four wheels. Little was done to distinguish the M6 visually from the 635Csi, other than the M6 badge and a slightly larger air dam. This car was a luxury sports coupe, having luxury features found on the 635CSi such as leather power seats, electric sun roof, and climate control. It was thus a heavy car with a well appointed interior, but it had tremendous performance. It was expensive, competing in the price range of the Porsche 928 and Ferrari 308GTS. The high cost and understated presentation limited the car’s success. Only 5,855 units were made from 1983 to 1989. BMW had to tune down the engine to meet the emission standards in the United States. The US version of the engine was designated as an S38. Other changes included different motronic tuning, cam timing, and exhaust headers.

This car was offered in two models. The M535i version had the 218hp engine used in the 635CSi. The car had a few improvements over the stock 535i, such as Bilstein sport shocks and struts, a trunk spoiler, and a M Technick kit. The US equivalent of the car was the 535is, but due to US bumper regulations it did not get the full M Technick kit. The other version of the car was a hand built M5, featuring the 286hp engine found in the M635CSi. To fit the engine into the bay, BMW had to tilt it an unusual 30 degrees. This car had a sport suspension, a geared steering wheel, and oversized brakes and calipers.

In order to compete in the European Touring Car Championships, BMW had to produce a minimum of 5000 units a year. The race car had to have the same basic engine, intake, and aerodynamics as the production model. The suspension had to fit to stock pick up points, and while larger wheels were allowed, they had to fit within the stock fenders. The E30 M3 is therefore easily distinguished by its oversized wheel wheels. These larger wheel wells were designed to handle 10" wide racing rims. Another feature was a slightly larger rear window to improve aerodynamics.

The power plant is a direct descendent of the M10 F-1 unit, minus two pistons. The engine has a forged crank, a four valve head and strengthened internals. To improve the M3's performance on the track, BMW introduced new versions on an annual basis. There where actually 13 different versions of the E30 M3 produced. Some of the models were in very limited production. Most were European models that never made it to the United States, including a few convertibles and perhaps some 4WD versions.