I posted about this on a number of M3 forums trying to get an answer. No luck so far. Here is the deal: In the 6 months that I owned my car, I noticed the gears grinding about 20 or so times (always when shifting to 4th). It doesn't happen often but it sounds horrible and the gear doesn't engage for a few seconds. It sounds kind of like a bad manual driver not using the clutch well and ramming and grinding the gears. It happens in any driving mode (manual or auto) and on any setting number (happened in all settings 1-5). I can watch the revs jump up and down while the car is struggling and trying to engage the gear as well. The mechanical grinding noise makes me cringe just remembering it. It doesn't seem to be dependant on the temperature of the engine (it has happened in the first 1 minute of driving and after 2 hours). Outside temp also doesnt matter. I went to the dealer and they couldn't reproduce it. I can't reproduce it even right after it happens no matter what I try. It is just random! Happened today and it grinded twice during the same shift (tried once then tried again to get to 4th gear). I have a 2005 SMG M3 with Comp package and 22k on the odometer. Only once did the SMG orange light go on and it spit out error codes: FC B2 SMG. I have no idea what they meant, but the tech's troubleshooting guide told him to run diagnostics (test plan B2360-S2SIF) on the SMG (why didn't they run the diagnostics last two times I was there?!?!?!). Diagnostics found problems and told him to update the software, and they did. This is what I was asking them to do first time I was there and the service advisor promised me there is no new software for the SMG on an 05 M3, and he looked at me like I was crazy. Oh well, I am glad they installed the software now. Well, it still keeps happening. It happens less often now (maybe twice a month) that the software was updated, and it's less loud, but the problem didn't go away. I complained to the dealer at least 5 times and it is all on the record. Has anyone had this issue? This problem wouldn't be bad if i could replicate it. Last time, the dealer kept my car over the weekend and it didn't act up. I am frustirated, someone else has got to have had this problem. I feel like it's rare so I could just live with it, but when it happens it even freaks out passangers (who quickly make fun of German reliability).