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Strongest 2002 Limited Slip Differential Build

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How To Build the Strongest Small-case Limited-slip Differential For Your 2002.

AKA: Late E36 318i/ti Pumpkin into an E21 Open 6-bolt Differential Case.

By Andrew Adams of Ireland Engineering ( a n d r e w a d a m s @ I e m o t o r s p o r t . c o m )

Disclaimer: This is not a beginner project, nor is it meant to be a complete diff-bible, and as such, I (or IE) are not responsible for ANY of your screw-ups. There are some topics which are abbreviated.


This would not have been possible without the constant teaching from Jeff and Jeremy of IE and knowledge of Rob at Precision Gearing. If this project looks a bit much for you, or you have the money but not the time, call Rob (http://precisiongearing.com/ ).

TABLE OF CONTENTS V6.5----------------------------------

– Basics: How a differential works

– Basics: BMW Differentials

Why the E36 318ti LSD?

Different Differential Cases

Rear Cover Options

– Basics: Performance Options

– Differential Rebuild

- Tech photo w/ part names

- Test break-away

- Removing diff from car

- Side-cover and LSD removal

- Pinion Shaft removal

- Cleaning

- Pumpkin Break-down and reassembly

- Pinion Shaft installation

- Pumpkin insertion

- Side-covers and Setting Lash

Basics: How a differential works.----------------------------

For those who'd like to understand the principles of the differential itself, I've attached some videos that explain it far better than I could (thanks Chevy and Toyota!)

Here's a link describing the basics of a clutch-type limited-slip differential (which is what we'll be messing with).


Basics: BMW Differentials.------------------------------------

BMW uses three different sized differentials. SMALL (168mm ring gear), MEDIUM (188mm ring gear), and LARGE (210mm ring gear).

For the sake of this write-up we'll be focusing on the small case limited slip differentials. These are found (as standard or option) on 4-cylinder BMW's in the 2002, E21, E30, and E36 cars.


Why the E36 318ti LSD?-----------------------------------

The E36 318ti lsd's were the last of the line for smalll case lsd's, and as such were the most capable in handling higher amounts of torque than earlier diffs. This is evidenced in a couple of ways.

– The lsd-cap is .5” thick, the thickest out of any bmw/ZF 168mm diff.


– The output shaft collars are noticeably thicker than the E21 & E30 pieces. It is my understanding that they are the same size as the pieces on the the medium-case differentials, but I have not verified that.


– The ring-gear bolts have a serrated underside for better grip.


These address the most common failure-points on the small case diffs, the cap cracking (or the bearing nose shearing), the splines on the spider-gear shafts shearing, and arguably the most common failure point; the ring gears bolts backing themselves out. With this center section I will have the best chance of having a small-case diff that won't blow up when powered by the 6-cylinder M20. This means there is no need to resort to modifying the rear subframe (or paying someone else an obscene amount of money) to fit a medium case differential.

Differential Cases---------------------------

2002 came with 4-bolt side-covers and bolt-in output flanges (with the ’76s having slightly longer output flanges).

E21 EARLY (08/79 and earlier) – 4-bolt side-covers and circlip-held output flanges

E21 LATE (09/79 and later) – 6-bolt side-covers and snap ring held output flanges

I’ll be using the late E21 open case for this with the beefier 6-bolt side-covers and 10mm cv-joint bolts (in the vain hope it will matter). You “should” be able to use a 4-bolt open 2002/e21 case if the center section coming out of the case is the same width as the Limited-slip pumpkin.

Rear Cover options on the 2002 with small case differential.


2002 EARLY (mid '74 and earlier)

2002 LATE ‘finned’

Alpina Finned*

Alpina Chinese knock-off*

Big Billet Cover*

Tap in AN fittings and run a pump/cooler.*

This differential will be using the 02 late finned cover, all the fancy options would be overkill on a street car. I want this differential to be well-engineered, not over-engineered.

The shorter the gear ratio (higher number [4.10,4.40, etc.]) the quicker the acceleration, but with a reduction of your top speed. There are many differential calculators online that should help you to find your ideal setup.

Basics: Performance Options-----------------------------------------

Rather than go into this in detail, I'll be straight forward. Unless this is a dedicated track/rally/autox car then the extra money spent is largely wasted. The only thing I'll be doing is increasing the brake-away torque, which I will not elaborate on.

If you do have a race-car and could benefit from different ramp-angles, added clutches, polished gears, safety-wire, etc. Then please call a 2002 performance parts supplier you trust (do NOT just use anybody and skimp).

Differential Rebuild-----------------------------------------------

1 Exploded view of the differential case and its components.-------------------------------


2 Remove the differential from car (see Marshall's excellent writeup ----------------------here …. http://www.bmw2002faq.com/component/option,com_forum/Itemid,50/page,viewtopic/t,373426/ ).

3 Break away:-------------------------------------------------------

Prior to disassembly, measure the break-away torque of your differential (how much force it takes before the LSD clutches slip). A good percentage of the used E21 LSD's out there today are worn to the point where they hold barely more than a sticky open diff (sorry for those of you who paid $400 for an non-inspected E21 LSD). If you can twist the differential out-put flanges in the opposite direction with your hands then you've got a very worn differential. A healthy stock e21/e30/e36 small case LSD should take between 25-30 ft/lbs before slipping. By measuring now, it will give you a good baseline indication on the condition of the individual components inside the center pumpkin.

I measured my E36 pumpkin to have a break-away of 26ft/lbs, so technically I would be ok if I was to just stick it into the case and call it a day. However, I'm shooting for a bit more than 40ft/lbs. which is about the most I'd want out of a street-oriented LSD. (by comparison SPECE30 medium case LSD’s are limited to 65ft/lbs., and most other 2002 race setups are around 80ft/lbs.)

4 Side-cover and LSD pumpkin removal:-------------------------------

First take off the rear cover and drain the oil, this stuff has a rather distinctive smell. Be sure to do this in a well vented area, or near your mother-in-law.


Pop out the diff flanges, this might take something rather long (big flat-head screw-driver. crow bar, or bar stock.). To prevent damage to the side-cover, use the bolt heads for leverage. With the flanges out, use a standard seal puller to remove the flange seal out of the cover.

Remove the side cover bolts (loosen progressively in a cross-hatch pattern so as not to warp the cover [think head bolts/studs]). With the bolts out gently tap around the side-cover with a thin flat-head screw-driver acting as a wedge; if care is taken you will not leave any lasting marks. As the cover starts to come off you'll see some thin shims, these are important to keep with their respective side as they allow for correct laterally spacing of the center-section inside the case. When you pull the side covers off the center-section will come loose and drop in the case, put some rags underneath to pad the fall or risk chipping the ring gear.


String the side cover and shims together while marking the which side of the case they came off of (I simply used a die punch marking one or two corresponding dots) so when it goes back together everything will be in order.

If you are swapping in a LSD pumpkin, remove it front it's case in the same manner.


4) Pinion Shaft removal:---------------------------------------

Now that the pumpkin and side-covers are removed you're left with the Pinion Shaft and the case itself. To start you'll need to pop-out the old lock ring on the backside of the input flange, you can remove it with a flathead screwdriver or drill.

Now you'll need to loosen the nut and to do that you will need to keep the shaft from spinning. BMW made a special tool that looks like this (if you have one, chances are you don't really need any instruction on how to do any of this). You can easily replicate something to imitate this tool's function. Loosen/remove the nut and tap “in” the shaft from the backside to remove the pinion-shaft. DO NOT take a typical hammer to the backside of the shaft; you will damage it in some way. Use a rubber hammer, and if that proves difficult, use a press.


With the shaft removed you will see that the pinion-shaft has the inner roller bearing pressed on it Toss the crush sleeve on the pinion-shaft shaft into the trash. To remove the inner roller bearing from the shaft you'll need to use the press and a strong bearing splitter. If it proves difficult (like it did for me) then use a torch to heat up the bearing a bit.

Now let’s go back to the case and focus on the inner and outer bearing races left in the case from the shaft we just removed. Start by removing the circular baffle with a couple good punches with the flathead.


Punch out the inner race (preferably with a softer metal rod like aluminum to keep your punch from gouging the insides of the case.)


As the race comes out you will see a spacer behind it DO NOT LOSE THIS, it spaces the pinion gear's depth in relation to the ring gear. Each spacer is specific to that particular ring and pinion.


Punch out the outer bearing race from the inside


You can also use a clawed bearing puller but I found the punch method much easier.

With this done the case is now fully disassembled into its sub-components.

CLEANING -------------------------------------

With the case completely apart clean, everything thoroughly. Thoroughly degrease the inside of the case; you don't want any muck causing havoc on your new bearings. Ideally, bath the case in a solution of degreaser. You can take some emery cloth (or scotch-brite pad) and rub down the pinion shaft along with getting all the teeth of the ring gear and pinion head. Then use brake cleaner (or otherwise) to make sure no residue is left behind. Any spec of grit can damage of your refurbished diff.

Prior to paint I broke out some die punches and stamped the case IE/AA/001 3.64.


Pic shows post paint.

Prep and paint the case in the paint of your choosing (engine enamel, por-15, etc.) likewise, with the rear diff-flange and side-covers.


For giggles I polished the rear cover, do whatever makes you happy (understand that the rear cover helps to dissipate heat so powder coating, painting, or otherwise adding insulation is probably not the best idea in the world.)


LSD PUMPKIN BREAK-DOWN & REBUILD-----------------------------------

First I compare both the E21 open center-section and the E36 pumpkin, they are the same height, and therefor compatible with one-another.


You'll notice the E36ti pumpkin has a pinwheel on one end, this pinwheel is read by a sensor on the diff case to calculate speed. Since we're not running this sensor, you can remove the speedo wheel (I used a die grinder).


If you are changing the gear ratio, remove the ring-gear from the pumpkin. To do this loosen the bolts a little at a time in a crisscross manner (just like head studs/bolts). With all of the bolts removed you will need to use a punch through the empty bolts holes and tap the ring-gear off (be sure to have some rags down for the ring to land on.


Now we tackle the case, using a bearing puller (or in my case, a bearing splitter and bench press) pull off the roller bearings from either end.


Using the same crisscross method as the ring gear bolts loosen and remove the allan-head bolts attaching top cover to the case. As you loosen the bolts you'll notice the top cover is held in tension by the as the internals expand. (Note the picture still shows the bearing in place, just ignore it)A weak limited-slip (with a low break-away) is simply due to a lack of tension on the internal components i.e. low break-away = worn internal parts = lost material = more space in case = less tension under load.


BLOW UP DIAGRAM OF INTERNAL COMPONENTS--------------------------------------


As you remove the cap you will notice 2 smaller washers (#2 & #3), the top piece is the smaller Diaphragm Spring aka Bellview Washer (make sure you see what way direction this goes in, you don’t want to put it back in upside down). The second washer is the Stop Disk, it has two indents on the bottom that allow for oil flow.

The first large disk is the larger Bellview Washer (#4), this provides much of the tension in the differential. Inspect the top surface near the inside diameter, a worn Washer will have a wear ridge there, if you can feel a change in height with your finger nail, replace the washer.

Next you have the dog-eared Outer Disk (#5), this disk acts like the surface face of a flywheel. It's available in a few thicknesses, with the thickest giving a higher break-away (but go too thick and you'll essentially have a locked diff. with no break-away). Check for any grooves or ridges and replace as necessary. Just as a flywheel you can also “resurface” the side of the plate which faces the clutch plate, just take fine-grade sandpaper (500grit) and scuff the surface evenly. The Outer-Disks on this diff looked and felt smooth, so all I needed to do was a little scuffing.


After the dog-eared Outer Disk you have the Inner Disk aka clutch-disk (#6)(and as you'd imagine it functions in the same way the clutch-disk works on the transmission). These clutch-disks have a grippy high-friction material coating on them. If your disk has no or little material left (will feel smooth to the touch) then it will slip much easier, replace it. These can develop a smooth inner ring and still have a grippy outer-ring, if this is the case, still replace it.


At the center of the LSD we have the Spider Gears and their housings.(#7, #8, & #9) The spider-gear housing pieces are officially known as the Compression Rings (#7) since they are the pieces that moves out-ward under load which put pressure on the clutch disk “locking” the differential. Like the dog-eared outer disk you can lightly scuff the surface. final28.jpg

Just inside and poking out of the Compression Ring, we have the Side Gear (#8) portion of the Spider Gears. The output flanges stick into these so the beefier the better. Check for cracks, if you can, get them magnafluxed along with the other parts of the spider gear and Ring & Pinion.


Finally in the middle are the 4 Bevel Gears and shafts (#9). Check them over carefully for hairline cracks.


From that point on everything on the bottom half of the case is a mirror image of the top, inspect everything and replace as necessary. Once the guts are all ready, use 2 new allan-head bolts [8x16 10.9] to secure the diff-top. Using a press, install the new roller bearings on either end. Make sure to only put pressure on the bearing's inner sleeve. Ignore that all the allan heads are in place in the pictures.



The last thing to do on the pumpkin is to bolt the ring-gear in place. First make absolutely sure there is nothing on either the ring-gear or differential mating surfaces (clean with denatured alcohol or similar). The ring is a snug fit so you might need to warm it up a bit with a torch before sliding into place (Hopefully you’ve waited for the denatured alcohol to evaporate, otherwise torch and alcohol equal BOOM!). Use some longer 12x1.5mn bolts to thread into the ring gear to act as guides as it’s lowered in place. With new bolts (or safety wired original bolts) torque the ring gear bolts down to 110ft/lbs using the slow crisscross method. When they are torqued down apply a dab of paint-pen paint to each bolt edge, this will allow for visual check when you want to make sure the bolts aren’t backing out. (If the paint seal is broke then the bolt has moved.)


Bolt down the top-cap with a couple of the allan-heads (not final torque), and check the break-away torque now while it is easy. I measured mine out to 43ft/lbs before slipping; perfect!

PINION GEAR INSTALL---------------------------------------------


Tackle the pinion gear assembly first, and the first step is to install the new inner and outer races. These can be rather tight, so it's a good idea to have them sit in the freezer a few hours prior to inserting them. On the inner race be sure to set the spacer/washer from the disassembly in prior to tapping the race in. Start tapping the race in until it sits snug on the washer/spacer (tap in the crisscross method to keep the race from going in sideways).

Use a press to install the new inner roller bearing onto the pinion shaft.

Slide the pinion from the inside, then from the other side slide on a new crush sleeve, roller bearing, seal, rear output flange, and the nut. Get the nut started by hand, but then attach the BMW special tool (or your equivalent) to the rear output flange and keep tightening with the socket (though you might need to switch to a breaker bar). At this point it's extremely helpful to have a couple of friends on deck to keep the diff from flopping over.

The factory manual calls for 25ft/lbs. of rotating torque. As you tighten the Pinion Shaft Nut down you'll feel quite a bit of resistance from the crush sleeve, be sure to stop frequently to rotate the flange/pinion by hand. With every twist the pinion should spin easier. Repeat this process until you hit the 25ft/lb mark continually (that is to say the pinion doesn't loosen as you twist) the final feel is similar to putting a finger in molasses (thick but smooth). With the nut torqued down, tap in your new lock-plate (it will be tight but it will expand into the relief slot on the flange [if you don't bend it in half]).


SIDE-COVERS & PUMPKIN INSERTION --------------------------------------

One of the more difficult parts of the entire process is the removal of the side-cover bearing races. Typically a race will have some sort of lip to use a punch or puller on allowing for removal, for some reason the E21 open diff's side-covers have no such access.


The only way to remove them is to carefully drill a few small angled access holes on the face of the cover so you can run a punch through and pop out the race.




(Then mask one end of the hole and fill with some JB weld). If there's a better way, I'm all ears.


Put the side-cover bearing races in the freezer for a half an hour (shrinking them slightly just as before with the pinion).

With the JB weld now dry and the cover's race surfaces clean and flush, take the new race out of the freezer and using your old race as a driver, tap the race in as before. With both side-covers races in, remove each of the old rubber O-rings and replace them with new ones. Press in new out-put flange seals.


With your side covers (and their respective shims) ready it's now time to address how to get the E36ti assembly in without any modification. If you try and take the pumpkin and simply slide it in you'll see that it will not fit.


Remove the 2 Allan-head bolts you bolted in to secure the pumpkin top-cover. Take care that you don't spill the pumpkin guts. With the top-cover removed there is now plenty of room the slide the pumpkin inside the case.


With the case inside, slide in the top cover and simply start bolting the Pumpkin top-cover through the side-cover opening. Use new bolts and some loc-tite,


torque the bolts to 25 ft/lbs using the crisscross method, to get that much torque you'll need to slide the passenger side flange in through the case and mount it stationary (bench vice), this will allow you to tighten a bold, back back the flange off, and rotate the pumpkin until all of the bolts are torqued.


Now with the pumpkin ready, slide one side-cover/shim on (use a little assembly grease) and tighten down 2 bolts. Tip the diff onto the side that has the side-cover bolted in and maneuver the pumpkin so one end sits in the side-cover race, this will line up the diff so you can slide in the other side-cover from the top, tighten 2 bolts as before. Now you're ready to start testing for lash.

Setting Lash----------------------------------------------------------

Please note that the factory manual goes over setting correct lash in-depth using precise measurements. After doing a few diffs via the manual you can start to feel the differences by hand. This is very hard to convey via a technical write-up, but I’ve given it a shot.

Lash defines the contact between the ring-gear and the pinion-gear. Too tight and the friction between the gears will be enough that the teeth will start flaking metal and stress-cracks will soon brake the gears. A too-tight lash can be identified by having a contact patch on the inner portion of the ring gear teeth (and there will be NO give when turning the input flange). Too loose and the gear teeth will shear clean off during high bursts of torque (i.e. drag racing, donuts, burnouts, etc.). This is identified by having a contact patch on the outside edge of the ring gear teeth. A proper lash will have a full contact patch on the middle of the teeth and a little give before the gears mesh which can be felt when turning the input flange.

To adjust the distance between the gears (thus adjusting lash) we use the side-cover shims



These shims compensate for manufacturing tolerances of the pumpkin and can move it laterally within the case. A thicker shim on the driver's side will set the ring-gear further away from the pinion-gear. A thicker shim on the passenger side pushes the ring-gear closer to the pinion-gear. I used Dicum layout fluid to observe the gear contact patch, you can use any sort of marking paste or fluid.


Many shim sizes are still available through BMW and typically cost $8-$10 each.

With all that in mind, the total shim thickness for the two shims on my e21 case was.120”


I test fit the new pumpkin with each shim as it was originally. This proved to be way too tight, there was no give in the input flange when turning and a test swatch of Dicum on the teeth showed a contact pattern on the far inside. For the next test I stacked both shims on the driver's side (pulling the ring-gear away from the pinion gear), that resulted in too much lash (about 1/4” inch before the gears contacted one-another) but it was better than the first test. My ideal lash was somewhere in between, going onto ETK and converting metric to standard I ordered the thickest shim available (.08”) and a corresponding (.04”) shim to maintain the .120” total thickness.

Once the new shims came in I put them on and broke out the Dicum once again.


In the initial twisting of the input flange, I found there was about 1/16th” lash before gear contact (near perfect!). Rotating the ring-gear through yielded a nice fat contact patch in the middle of the ring-gear.


Lash set, and ready to go.

For the final assembly of the side-covers I pulled the 2 test bolts from either cover, added a touch of loc-tite, and torqued down all 6 bolts for each side. As the Piece de resistance I popped on the polished re-drilled output flanges. I'll be using the stock '02 8mm cv-joints for now but will switch the the 10mm E21 cv-joints once the M20 goes in.




Lastly was the rear cover gasket and rear cover. With those in place I had a complete, tough, limited-slip diff ready to be installed and broken in.


That's all for right now, I will be editing all this over the next couple days.

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  • 3 weeks later...
  • 1 month later...

update to this thread as i redo one of my diffs.

instead of using punch to tap ring gear off, you can use the longer bolts that hold the diff cover on the back of the diff. same thread as the ring gear bolts. can also use them to make pulling the new ring gear on easier.

that ring gear bolt thread is also 10x1mm, not 12x1.5.


there is also another part in the pinion sequence not identified in the above diagrams. there is a metal "barrier" that taps into the case situated around the middle of the pinion shafts.


a method to TQ the ring gear bolts on a loose spool.


and the page from the blue book that shows how to calculate the pinion shim size.


i think rotating TQ on the pinion input when setting the input nut is probably 21-25 INCH pounds as opposed to the FOOT pounds Andrew listed. typo i am sure!

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  • 1 month later...

Good write up, altough I must add some info as a professional BMW LSD builder :)

In my opinion the E21 lsd unit is stronger than the late E36 ("280").

Mind you that the sidebearings are sitting closer to each other on the E21. that´s an advantage.

E21 diff housing is better because it has a bigger pinion bearing, just like 2002 turbo had. Don´t forget they used this diff on the euro 323i E21.

I agree the E36 planetarys are better as they have the 23 teeth design for the friciton plates. You can put those inside the e21 lsd casing along with the proper E36 compression rings (and there are 2 versions!).

That´s what I use on big torque aplication such as modified 323i´s or so, sometimes I have to go 4 discs(75%) otherwise it will desintegrate the discs tooth, specially using the recomended/modified ramp angle.

I don´t understand why don´t you use a drift to hammer the sidebearings races out. It´s a piece of cake if you have a good quality drift punch.

The same thing for the star plate, 2 whacks and it´s out...

To put the new races in I use my big bench vice, piece of cake.

Don´t try that with a crappy or small vice, you could damage it.

Better of using a press or heat cold/heat then.

Every bolt should locked with threadlocker Loctite, specially ringear bolts, ask me how I know this :(

I recommend keeping everything spotless clean when reassembling.

Be very carefull with crowngear teeth, becuase a minor dent, almost invisible, will cause MAJOR rumming and you willl be crazy trying to find out what´s causing it.

Spacing shims should be cleaned with wirebrush, measure the thickness with a micrometer, specially if using the 6 bolt version(4 bolt version is a PITA to shim correctly even for me)

Every particular ratio/housing assembly has a correct pinion shim to it.

If you take a pinion/gear and install it on another housing you will be in big trouble if you don´t shim the pinion correctly.

You will be very lucky if it turns out ok.

Backlash should be checked with a dialgauge everytime!

This is most important and if too much it can break pinion teeth and make an awful mess inside your diff, account on a complete rebuild if that happens.

It´s not rocket science but you must be precise and pay attention to detail.

And now my hijack:

If you need modified ramp angles you can reach me at [email protected]

or you can find me on ebay under "carbsandparts".


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Appreciate the added input picon, as I mentioned at the beginning some of this is abbreviated on purpose. It appears much of what was said is reinforced by what you said. I guess we'll just have to agree to disagree on which case is the strongest.

As for custom ramp angles, I recommend both Rob at Precision Gearing (can also be found on ebay), and Rob at Rids Engineering.

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  • 3 years later...
  • 3 weeks later...

Yes. with a couple exceptions.


1) The E21 LSD pumpkin and case are different widths than all other small case diffs.  For example if you have an E21 LSD you cannot swap in a different (e30/e36) pumpkin.


2) That whole "strongest" thing goes out the window.


3) Double check output shaft splines.  They can vary.

Edited by AceAndrew
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  • 3 years later...

I have a totally different method of removing the side races of the bearings,

Just tape it nicely so no welding spots are where thay shouldn't be.

Have a nice welding on the inner surface of the race.

Wait until it's cooled and turn around - they simply fall out. The welding will shrink them enough once cooled.







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