Background:

The following information is only useful for manual transmissions.  If you have an automatic, this will not help.  Unless you want to swap to a higher ratio...  But that's just crazy talk!

• The 6-cylinder E30's were available with quite a few rear gear ratios: 2.93, 3.25, 3.73, 4.10
• The 318ti has a rear gear ratio of 3.45 (4.45 for automatic). 
• The 318ti uses a small-case differential, while the 6-cylinder E30's and E30 M3 use the larger case diff.

If you've done any searching, a limited-slip 3.45 rear differential is not easy to find.  In fact if you do discover one, it no doubt will be selling for over $500.  E30 diffs, on the other hand, are a dime a dozen.  Look on eBay or go to your local salvage yard, and you'll discover that E30 LSD's are attainable in the $200-$300 range.

That being said, you'll need to choose a differential to suit your needs.  Since the stock ratio is 3.45, moving up to a 3.73 or 4.10 will yield faster acceleration and sacrifice top speed.  If you're one of the lucky few with a supercharger and would like to keep the rpms down while cruising, perhaps a 3.25 would suit your needs.  I chose a 3.73 LSD myself.  With a 3.73 ratio in place, your rpms will increase by approximately 300 revs.

Parts Needed:

• E30 rear differential
• E30 axles/halfshafts (both)
• 2 quarts Red Line 75W-90 gear oil (or whatever you prefer)
• CV joint grease (optional)
• 33 41 1 124 945 (x2) drive flange collar nut securing plate
• 33 41 1 128 346 (x2) CV joint circlip (if swapping CV joints), part # may not be correct
• 07 12 9 964 672 (x4) driveshaft self-locking nuts
• lots of paper towels or rags
• lots of latex gloves

If installing the M-coupe diff cover (see http://e30m3performance.com/installs/Diff_cover/Diff_cover.htm):

• 33 11 2 228 335 M Coupe diff cover
• 33 11 1 210 405 diff cover gasket
• 33 11 1 206 166 speedo o-ring (optional)
• 33 11 1 212 682 (x2) drain and fill plugs (optional)
• 07 11 9 963 355 (x2) crush washers
• 07 11 9 914 114 (x2), 10mm x 25mm
• 07 11 9 921 541 (x2), 10mm x 75mm
• 07 11 9 921 522 (x4), 10mm x 85mm

Tools Required:

• 30mm socket (6-pt preferable, 12-pt if it's the only thing you can find)
• 17mm, 19mm combination wrench
• 19mm socket
• 18mm socket & combo wrench
• E12 torx head socket
• 8mm, 10mm, 14mm hex/allen key
• screwdriver(s)
• hammer
• circlip removal tool
• torque wrench
• heavy duty impact wrench (optional, but VERY highly recommended)
• jack, jackstands, wheel chocks

Procedure:

Here we go.

First, check over your E30 diff.  Make sure yours came with the axle flanges, as seen on the sides of the diff:

(Mine did not, and I had to purchase them later.  This was easier said than done, as most people will not let you have the flanges alone).

If you want to put the M-coupe diff cover on, do it first.  Since the directions are already written up here, http://e30m3performance.com/installs/Diff_cover/Diff_cover.htm, I won't cover this section.  Here are some pictures of my install:

Note: make sure the speedometer pulse sensor shown below is aligned with the toothed gear inside the diff.  If it is not properly aligned, damage could occur to the diff.

After everything is assembled and tightened down, fill the diff with fresh Red Line 75W-90 fluid.  Mine required slightly less than 2 quarts of fluid.  Keep in mind that you should orient the diff in the same horizontal position as it would sit in the car.  With the diff in proper position, pour the fluid into the top fill plug until it starts to overflow out.

Now it's time to go to the car.  Chock the front wheels, jack the car up, and remove the rear wheels.  Also remove the spare tire.  If you like doing exhausting work (ha!), go ahead and remove the exhaust assembly.  It will give you more room to work around the driver's side.  (I choose not to remove my exhaust because I hate it).  Make sure you use jack stands on both rear sides (I positioned mine under the rear subframe).  With the wheels off, you should be able to see the drive flange collar nut. 

Using a 30mm socket, remove the nut.  Remember how I said the impact wrench was optional in the tools section?  Well, it really should be mandatory.  The nut is so shallow that you can't get a good grip on the damn thing.  Of course I didn't have an impact wrench, so I ended up putting the wheels back on and driving to Sears.  $180 later, I'm the proud owner of Craftsman 1/2" electric impact wrench.  :-)

It seems silly to buy this thing for only removing those 30mm nuts, but whatever excuse I have to buy more tools I'll take.  (I admit I got a little wrench happy and started zipping bolts off and on).  Weeeeee!

When you remove the drive flange collar nut, the nut securing plate rips off with it.  The impact wrench seems to chew through this pretty well, which is why you should buy 2 new ones.

With the collar nuts off, slide a jack underneath the rear trailing arm and make the axle semi-horizontal.  This makes it easier to get a wrench on the the (6) E12 torx bolts at the inner CV joint and diff.

Remove the E12 torx bolts from the diff flange.  Make sure you have something to support the axle from drooping at a drastic angle, or you may damage your outer CV joint.  If the axle does not drop straight down and away from the diff, you may need to lower the jack under the trailing arm.

Using a screwdriver (or any metal object), hammer the axle out of the hub assembly.  It takes quite a bit of force to drive the axle out, but don't worry about breaking anything.  Just make sure you don't mangle the threads on the end of the axle, which is why I recommend a screwdriver that will sit in the axle indentation on the end.

 Repeat the same procedure for the other side.  The driver's side will be more difficult if you left the exhaust in place.  By carefully adjusting the position of the trailing arm and disconnecting the lower shock bolt, you should be able to sneak the axle out.

Now it's time to remove the rear diff assembly.  First, disconnect the speedometer pulse sensor connector.  Remove the two rearmost 19mm bolts on top of the diff with a combination wrench:

Support the diff with a floor jack.  Next, remove the front two 19mm bolts:

Finally remove the nut and bolt for the diff bushing using a 18mm socket and wrench:

Tilt the diff away from the driveshaft studs and lower the floor jack to remove.

Let's compare the stock 3.45 open diff and the 'new' 3.73 LSD:

The E30 diff is definitely wider, but you can see that all the bolt locations are in the same places.

I decided to pop out the axles flanges for shits and giggles.  Looking at them, you can see that the E30 flanges are much beefier than the ti's.  Due to the added length of the splined shaft, you cannot swap the 318ti flanges into the E30 diff.

Here's where it gets to be a pain in the ass.  Originally I had thought the E30 axles would be shorter and were needed to compensate for the wider diff. 

Looking at the picture, the E30 axles weren't any shorter than the ti's.  In fact, they seem to be a little longer.  This was counter-intuitive, since it would seem that the axles would now push the hubs outward.  Of course, this can't happen since the hubs are primarily located in position by the rear trailing arm and not the axle.  OK then, what should be done about the axle flanges?  We definitely need the larger bolts and inner CV joints to bolt to the E30 diff.  So we're left with two options: either directly swap the E30 axles into your ti, or pillage the E30 inner CV joints to transplant to the ti axles.  I won't bullshit you; if you can get the E30 axles to directly bolt in, DO IT!  I could not:

The pulse rings (toothed gears) on my E30 axles, which are used by the ABS sensors, were shot.  Since I'm not ready to give up ABS quite yet, I had to swap the E30 inner CV joints onto the stock axles.  Plus, the general condition of the 318ti axles was much nicer.  So why does swapping them suck so badly?  One word: GREASE.  Yeah, those CV joints are packed with grease, and lots of it.  It gets everywhere.  Now, let me warn you; don't be stupid and try to do this in your living room.  If you do, here's what happens:

I guarantee those carpets stains aren't coming out!  Undiluted Simple Green helps a lot.

Getting down and dirty...I vow never to do this again!  Pop off the dust covers from the inner CV joint using a screwdriver and hammer:

Remove the circlip shown under the dust cover in the diagram.  You will need to clear off most of the grease in order to see it.  A circlip removal tool helps a lot here, or else do like I did and swear and curse until you pry it off with a small screwdriver.  After the circlip is off, you should be able to slide the inner CV joint off the splined axle shaft.  If it doesn't come off easily, use a little "persuasion" with a hammer to knock it off.  Do not hit the CV joint too hard, or you can ruin it!

I hate grease!  I ruined a perfectly good shirt and pants doing this.  Anyway, the E30 CV joint will slide right on to the stock 318ti axle shaft.  Replace the circlip on the end of the axle shaft, and pack the CV joint with grease.  Use either new grease, or do like me and reuse the grease from both the old and new axles.  The Bentley manual specifies 85 grams (3 oz) of grease for the inner CV joint.  Also pop the CV boot back on the flange and replace the band clamp.

Above is what your hybrid axles should look like.  Now carry these outside; or if you were smart, you've been doing this outside the entire time.

OK, so you now have the E30 diff and hybrid axles ready for installation.  Position the E30 diff in place under the diff carrier using a floor jack.  Tilt the front of the diff upward to mate with the (4) driveshaft studs.  Then jack the rear of the diff upward into the rubber bushing mount.  It is advisable to loosely install the topmost rearward bolts first, then install the two front carrier bolts and the rubber bushing bolt.  The clearances on my E30 diff mounting holes left no room for error.  Even the slightest tilting of the diff could prevent the holes from aligning properly, so have patience.  Note: With the M-coupe diff cover, one of the cover bolts touches the trunk floor by a small amount.  It probably isn't much of a concern as long as the diff clears the metal pieces.  Also, with the M-coupe cover (and maybe the stock E30 cover) the spare tire will no longer fit under the car without hitting the diff unit. 

Once the diff is in place, tighten down the driveshaft nuts and carrier bolts.  The rubber mounting bushing should be at 64 ft-lbs, while the carrier bolts are 81-91 ft-lbs.  Plug the speedometer pulse sensor connector back into the diff.  Sit back and admire this sight:

Only a few more steps to go!  Lightly lubricate the axle splines, and insert the outer end into the hub.  Make sure you have the splines lined up on both the axle and hub assembly.  When it is in position, lightly hammer the flange to drive the axle outward into the hub.  Once you are able to get the collar nut on the axle, tighten it down with the impact wrench.  This should draw the axle the remainder of the way into the hub.  Now move the inner CV joint into place and bolt it onto the output flange using the (6) 10mm allen bolts.  The specified torque is 42-46 ft-lbs, but I was not able to get a torque wrench in those tight quarters.  I just made mine very tight.  Repeat for the other side.  When you finish, here's what you should have:

From behind the car, the upgrade isn't too visible.  Bring on the next unsuspecting victim ;-)

Performance:

At first I really couldn't tell much of a change.  I let Joseph Koral drive it too, and that's when I started noticing that it pulled much harder.  The rpms are raised between 250-300 revs.  It really isn't that bad; I was expecting a buzz bomb on the highway.  After 3 days of driving, I don't find it necessary to downshift as often when passing.  The upgraded M-coupe diff bushing seems to make the rear of the car much firmer (or maybe it's because I fixed a detached swaybar tab at the same time as the swap).  I can definitely take corners much faster due to the limited slip.  Donuts are much easier to do too!  :-)  All in all, it's probably the best performance upgrade I've done.

Note: "A shim or spacer may be needed on the rear ABS wheel speed sensors when installing E30 6-cyl axles. The ABS pulse ring is slightly larger on the E30 axles, where it may be large enough to hit (and destroy) the ABS sensor. Check the clearance of the ABS sensor & shim as necessary before completely bolting the outer axle to the hub."

Bigger and better things to come...  Have fun!

Constant