Despite its great success and critical acclaim, the S54 was plagued with rod bearing failures in early production.
BMW attempted to blame vehicle owners for the failures early on but eventually started replacing rod
bearings, oil pumps, and whole engines under
warranty. This fault was attributed to a problem with the connecting rod bottom-end bearing shells that were supplied to BMW by a third party that did not meet BMW's specifications. This problem was fully corrected by BMW on engines produced after 06/2003. A recall was issued to retrofit all M3 cars with affected engines to swap to the proper bearing shells.
The recall did not include M Roadster or M Coupe cars with affected S54 engines due to the lower RPM limit.