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I’ve found that the most modern, highest-performance vehicle often isn’t the most fun to drive. 

Given a twisty road and the choice between a 650-horsepower, turbocharged, all-wheel drive supercar with 335-section tires or a 20-year-old M3, I would prefer the BMW. So how far does that train of thought go? Is it possible that a slower, less advanced, automated gearbox, such as SMG, could be enjoyed for the same reasons? Surely, it’s the most analog of production semi-automatics. Twenty years after its heyday, can the once-derided BMW SMG transmission offer a newfound sense of connection and hidden charms?

Before dual-clutch gearboxes were commonly available, and before nearly-seamless automatics became the norm, cars were equipped with one of two types of transmissions: manual transmissions and something worse. 


At the turn of the millennium, automatic transmissions were perfectly adequate but generally slow and unengaging. Regardless of sporty factory tuning or selectable modes, an auto was a decidedly lazier driving experience, saddled with added weight, worse economy, and sometimes even robbed of horsepower compared to the manual version.

SMG — BMW’s imaginatively-named ‘Sequential Manual Gearbox — was an attempt to bridge the gap between automatic and manual: a performance-focused gearbox, worthy of the M-badge, in a car with only two pedals. The first iteration, SMG I, was exclusive to Europe, but an upgraded ‘SMG II’ became available on our shores with the E46-generation BMW M3 in 2002. 

In BMW’s words: The SMG II combines the six-speed manual gearbox (S6S420G) of the E46 M3 with computer-controlled electrohydraulic clutch and gear change operation. The driver is provided with the accuracy of manual gear selection, the convenience of automated shifting, and the speed and adaptability of driver-adjusted computer control. 

Lighter than a traditional automatic, SMG ditched the torque converter altogether — in fact, it was a true manual gearbox with an automated clutch. It came steeped in contemporary Formula 1 technology, and we were told it used computers to bang out gear changes faster than a human ever could. For millions of Gran Turismo-obsessed teens and enthusiasts, who were already accustomed to triggering instantaneous digital gearshifts from their Dual Shock 2 controller, it seemed like the future had arrived.

“Why is it slipping the clutch …now?,” you might ask aloud. “Is it damaging itself?” These are completely normal concerns. It might be! But it’s probably fine. Be patient. 

Initial impressions were positive. Motor Trend hailed SMG as “the most sophisticated transmission available in a production car” in 2002, and Car and Driver found the $2,472 option on the M3 to be worth its price in convenience. 

But technology moves on, and just six years after it was introduced to the North American market, SMG was replaced in the M3 by the new Getrag dual-clutch transmission (DCT). The final SMG III-equipped M5 and M6 models ended production in 2010, and with that, BMW closed the book on the Sequential Manual Gearbox.

In the years since, enthusiasts have largely shunned SMG. Tales of costly repairs and complaints about clunky drivability dominate the online search result pages.  It isn’t hard to find criticisms that decry it for lugging, lurching, and just generally being unpleasant while drawing comparisons to “a student driver learning to operate a clutch.”


Surely, the intervening twenty years of automotive progress must have made this obsolete piece of technology feel even worse? Especially now that most of us have experience with smarter, smoother gear changes found in more current cars. 

On the other hand, now that it’s freed from being expected to be the highest tier of performance, maybe SMG can be enjoyed as an experience, a point of reference to an earlier time. 

I needed to find out, and the opportunity arrived in the form of joining a friend to pick up an SMG-equipped M3 he had purchased in New Mexico. What better way to familiarize yourself with SMG than by embarking on a quick, 1300-mile weekend road trip? The journey would be as rapid-fire as BMW claimed SMG gearshifts to be, but hopefully, that was enough time to get up to speed with it. How steep could the learning curve be for a transmission that is supposed to function …automatically?


I’ll mention now that Daniel Sloan is the friend buying the M3. He’s built an all-wheel drive, rally-focused E46 wagon we named the “M3baru.” He’s crossed the country multiple times in a manual E46 M3 convertible and driven all over the Pacific Northwest in his track-ready E46 M3 coupe. I’ve been able to join him for nearly ten thousand of the 100k+ miles he’s driven in manual M3s. All of this is to say… we have a pretty good idea of what the M3 is supposed to feel like. 

Neither of us had ever driven an SMG M3. 

Daniel had specifically sought out an SMG M3 for a taste of something different and because it seemed theoretically ideal for left-foot braking. Bottom-of-the-market pricing, compared to other E46 M3s, didn’t hurt either. 

We saw the car for the first time at the seller’s house in Albuquerque. It looked great, finished in Steel Grey over a beautiful Imola Red interior, and in remarkably nice shape for 109,000 miles.  


Hop inside, and everything is familiar but different. In the center proudly sits a stubby, mirror-finish gear selector, surrounded by a miniature shift boot and a big chrome ring, all within an SMG-branded bezel that looks a bit DIY. The steering wheel has paddle shifters, and by the floor, there are just two pedals. But not the wide brake pedal you would find in an automatic BMW. No, no, it’s the narrow brake pedal from a manual M3. The intent from BMW was clear, in what I would notice is a recurring theme: this is absolutely not an Automatic

Frustration sets in before we even set off. Press the brake, shift into Drive, and, well… that would just be too easy, wouldn’t it? 

We finally engaged ’S’ and laughed at the obtuseness of it all. It would not be the last time we would find something hilarious about the gearbox and its behavior. 

Once you get it going, it’s a recognizably-M3 experience. It makes the right sounds, the inputs feel good, and around town, and gearshifts are executed lazily but competently. The SMG system uses an array of sensors that monitor dozens of data points and factors that information into shifting behavior: throttle position, brake input, temperatures, and more. You get the sense that there are hydraulic pumps and actuators, and computers with Pentium processors, all working tirelessly just to deliver a driving experience that feels almost normal. Almost. 

“Why is it slipping the clutch …now?,” you might ask aloud. “Is it damaging itself?” These are completely normal concerns. It might be! But it’s probably fine. Be patient. 


With SMG, the default mode is manual, and I love this. The driver is still an integral part of the experience, and if you forget to upshift, it takes a lot for the computer to step in and override your complacency. 

When you drive cars with Porsche’s PDK system or Volkswagen DSG, using the paddle shifters feels a bit like cosplay. You can shift all you want, and you can pretend you’re helping, but you are definitely not helping if your objective is to drive faster on a given road or circuit. You’re reminded how non-essential you are every time the computer steps in and says, “We’ll take it from here, chief,” if the revs get too high or drop a little too low. More often than not, you start a drive with the best enthusiast intentions — in manual mode, with fingertips at the ready behind the steering wheel, and ten minutes later, you’ve sort of forgotten all of that. The gearbox has seamlessly defaulted back to automatic mode.     

With SMG, you can’t forget — it won’t let you. You’re involved, and you’re required to take action. You can choose to put it in Auto, but you half-expect the display in the gauge cluster to belittle you for it.   

"A few maddening user interface decisions undid a lot of brilliant engineering." 


Intuitively, you would think that downshifts would be harder for the system to get right and that upshifts would at least be relatively smooth and undramatic. You would be wrong. 

When pushed, the upshifts are a delicate dance of lifting, shifting, waiting, and planting the throttle. In what order, I don’t exactly know; I never quite got the timing right. Sure, you can leave your foot to the floor when you fire off an upshift, but the pause in acceleration while it cuts power and makes the gear change will feel so dramatic that, at times, you truly think you might come face to face with the windshield if you weren’t safely buckled in. 

Downshifts felt better, maybe because they often didn’t seem as time-sensitive as a full-tilt upshift. For all gear changing, there’s a five-mode selector called DRIVELOGIC that lets you choose your level of shifting intensity. Settings 1 and 2 were considered by critics to be unusably slow, even in 2002. Modes 3 and 4 get the job done for most driving needs. Setting 5 is pretty rough, and I’ve since learned that there’s a hidden ‘level 6’ setting that’s only accessible with DSC turned off. 


This car has been equipped with some exhaust modifications that make it louder and raspier. When SMG does things with the throttle, you hear it. It barks on downshifts, and it sings when it snaps on the throttle after a perfect upshift (it is possible! Daniel did it approximately once on a highway onramp). 

The dramatic exhaust note and abrupt, staccato shifting sounds—compared to the M3s we’re used to—add spectacle and a sense of occasion to the experience. It feels like a race car from the early 2000s with an experimental prototype gearbox. The more in-depth I read about SMG, the more it feels like that’s what it is, and that is undeniably cool.

Then when you think you have the hang of it, it revs for no reason, and you don’t know why it did that. And that makes it more mystifying but strangely more compelling. 


I had low expectations about the drivability of SMG, which it mostly exceeded on the road. Before spending 1,300 miles in this car, I never expected I would be sitting here writing that the worst aspect of SMG, by far, is the user interface. 

It is time to address the shift lever and the SMG II Electronic Display Unit.

In a tragically-misguided effort to evoke the H-pattern shift gate of a manual transmission, SMG is not a straightforward ‘PRND’ affair. Instead of having anything resembling the tried-and-true Park/Reverse/Neutral/Drive in a row, SMG is manipulated by a four-way joystick that’s meant to approximate the look and action of a traditional manual shifter. The gear pattern arrangement is in an awkward plus-sign that slightly resembles the symbol used by Prince in the 90s, using an arrangement and nomenclature that is unlike any other transmission in the world. 


You’re provided with a small LCD screen below the gauge cluster called the Electric Display Unit. It shows you what gear you’re in, and the options are: 

  • Reverse 
  • Neutral (0)
  • Forward/Sequential Mode (S)
  • Upshift (+)
  • Downshift (-)
  • Automatic (S again, which becomes A)

It highlights your current gear in big numerals, but the diagram itself does a poor job of helping you, giving only the faintest visual cues to indicate which ’slot’ the gear is in. 

If you refer to the diagram on the shift lever itself, you’ll find yourself out of luck: the incomplete schematic is dominated by a decorative “M” logo that replaces the S/A gear option. Maybe, once you’re accustomed to it, you never have to think about it again. But in hundreds of miles of driving, I never got comfortable with the gear selector, and it wasn’t just down to the unintuitive and incomplete diagram. A larger sense of vagueness and unease came from never being fully confident about what state the shift lever was in. 


Move the shift lever left and up to engage reverse. The lever stays there until you disengage reverse. This is considered a physical state because the input remains in a different position, and you can tell what gear it’s in just by looking at it. Move the shift lever from the center over to the right, and this engages S, which stands for Sequential (not Sport, as I had assumed for more than 24 hours). The lever stays to the right, but you can move it to the right again to toggle to A (Automatic mode). The shift lever returns to the same right-of-center position — this is essentially a virtual state with two drive modes that use the same selector position. Something about this breaks my brain, leaving me feeling unconfident every time I see this silly little chromed shift lever. 

I wish I could say that SMG has been wrongfully maligned for all these years. BMW leaned so hard into a defensive, “don’t call it an automatic” position that they made the usability of SMG worse than it needed to be. A few maddening user interface decisions undid a lot of brilliant engineering. 

I wondered if I could live with this gearbox once it had become second nature. I thought about the driving experience itself, and I thought about the various manual E46 M3s I have driven in the past.


The memories that always stand out to me are so tactile: the light steering, the fat-rimmed steering wheel, and the impossibly revvy S54 inline-six. It’s smoother than you expect and revs much faster and freer than you can believe.

With SMG, you never get to experience this aspect of the M3. If you’re on the throttle, the motor is always under load. You never have a chance to feel it rev in neutral. It’s always burdened, so you miss out on a quintessential characteristic of the M3 and the experience that defines this car. If you had only driven an SMG-equipped M3, you would never know the sensation and character of this car and this amazing motor. 

The ultimate failing of SMG isn’t anything it did wrong; it’s what it could never do.

author image
Written by :
Kevin McCauley

Based in Houston, Texas, Kevin has been professionally shooting cars for five years. When he’s not working on commercial projects or editorial shoots for Road & Track or Autoweek, he’s often finding creative inspiration from snapping pics of his 1980 911 SC, which is just as rewarding to photograph as it is to drive. --@capturingthemachine

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