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SEM Classic Coat in 17093 Black works great for touching up worn leather in the E46. It's a flexible coating designed for leather and vinyl and popular with body shops and used car dealers. :) It's an aerosol spray can, but can also be sprayed onto a rag and dabbed onto the seats. It worked great on the bolsters and a scratch on one seat. Looks just like the original finish. Ideally, you'd want to scuff the area with a grey Scotchbrite pad and clean the area with naptha or 91% isopropyl before applying. SEM sells a leather prep, but I think it is just naptha.
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I'll tell you what NOT to use. I bought Weiman leather wipes. Supposedly, just use the disposable wipes (kind of like those Lysol/Clorox antibacterial wipes) on leather and it's fine. I did a quick clean of my black leather seats in my ZHP. They have been pretty neglected, but still clean. Mostly, just haven't been cleaned/conditioned in a while. The Weiman wipes smell good, but I don't believe it helped clean or condition it in any significant way.