What kind of engine oil for 1996 BMW 328 I sport
A good quality multi-viscosity oil. The best viscosity range depends on the temperature where you live but for most climates, 10W-30 is best for an e36 328. I used 20W-50 for many years in the warm Sacramento climate, but I had some odd performance on cool mornings that I attributed to the old VANOS not moving smoothly with the heavier oil, so I switched to 10W-30 and the problem seems better.
This car came with conventional oil in it. Some e36 owners have switched to synthetic motor oil with no problems. My experience with trying a synthetic (Mobile 1) in my two '97 328s was not good so I switched back to Castrol GTX. When I tried synthetic oil in my two '97 328s and my 91 Volvo, all three cars developed oil leaks almost immediately. However, other owners report no problems at all with synthetic oil.
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