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The ALMS rules were altered for 2002 to state that 100 cars and 1,000 engines must be built for the car to qualify without penalties. Although BMW could have raced the V8 with the new weight and power penalties under these new regulations, they chose to pull out of the ALMS, effectively ending the short-lived M3 GTR's career.

Two Schnitzer Motorsport GTR cars saw a comeback in 2003 at the 24 Hours Nürburgring, winning 1–2 in 2004 and 2005, as well as entries in the 24 Hours Spa. Onboard coverage recorded in 2004 Hans-Joachim Stuck, Pedro Lamy, Jörg Müller and Dirk Müller on the Nürburgringand Spa-Francorchamps.

Private teams (Scheid, Getrag, etc.) also have fit 3,997 cc BMW V8 engines into the E46 body to race on the Nürburgring, winning someVLN races in the last years.

The BMW M3 CSL (Coupé Sport Leichtbau)was a limited edition version of the M3, with only 1,400 cars being produced for its 2004 model year run. The CSL was never released into the North American market,and was only available in two colors – Silver Grey Metallic and Black Sapphire Metallic.

In order to improve the handling ability of the car, the entire suspension system was further refined.Specially developed racing springs and dampers are given to the CSL, and a tightened steering ratio (14.5:1 vs 15.4:1 on the regular M3) improves responsiveness.The braking system is also modified, with larger front and rear floating rotors and calipers from the E39 M5. The CSL is given a retuned dynamic stability control system with a "M track mode" setting that allows the car to be pushed to its absolute limits before being activated.

The 3.2 L engine used in the M3, the BMW S54, has been modified to increased output by 17 hp (13 kW) and 5 N·m (1 lb_f) over the European M3. This is achieved through a high flow carbon fiber air intake, modified valve and camshaft timing, and a retuned DME.However, the engine is further modified in order to reduce weight – it features a lightweight exhaust manifold and thinner exhaust piping. Additionally, the intake and exhaust manifolds are slightly straightened to improve engine responsiveness.

The CSL also has various aesthetic modifications over the standard M3. It received an aerodynamic lightweight body kit which included carbon fiber front splitters that improved downforce at high speeds by 50%,as well as a carbon fiber rear diffuser. The front bumper has a distinct hole that is used to draw cool air into the newly designed air intake.The trunk floor is made of lightweight fiberboard. The trunk lid is redesigned to incorporate a raised lip, unlike the standard M3 where one is simply added onto a flat trunk. The CSL was sold with distinct 19 inch lightweight forged BBS alloy rims that came with Michelin Pilot Sport Cup semi-slick racing tires.^[19][25] The interior of the CSL is redesigned with a sporty-weight saving theme. The CSL obtains fiberglass front racing bucket seats, and fiberglass backed rear seats. The center console, door panels and trim, and headliner are all formed from carbon fiber,and the steering wheel is redesigned with cruise control, stereo, and phone controls removed to include just a single button that activates the M track mode.

Unlike the standard M3, which was offered with a standard 6-speed Getrag transmission, or optionally a SMG drivelogic transmission (also known as the SMG II), the CSL was offered only with the SMG II transmission. This is the standard 6-speed Getrag transmission with an electrohydraulically actuated clutch pedal, similar to an Formula One style transmission. However, the CSL received a more advanced drivelogic unit than the standard M3 that was capable of making shifts in 0.08 of a second.

While it is known as the M3 Competition Package (ZCP) in the US and mainland Europe, it is also known as the M3 CS (Club Sport) in the UK.

Although the M3 CSL was never exported to the United States, for 2005 BMW introduced an M3 Competition Package in both Europe and the US (a.k.a. CS/Club Sport in the UK): a $4,000 option which offered a number of upgrades taken from M3 CSL. The package includes: