I'm glad I finally found this thread. The guy I bought my Z4 from told me the noise was normal. What a liar. After reading this thread and educating myself, I will definitely be back at the dealer this spring to get my car fixed. Needless to say, even after this problem is fixed, I will not buy from the same salesman but if they fix the problem, I'll still be a BMW customer.
Will the service department, at this point, still go through the steps of bleeding, then lifter replacement before cylinder head replacement? Sounds like the definitive fix to this problem is cylinder head replacement.
Also, since this is a known problem, why was my car sold to my as CPO if this is a problem that can potentially cause shorter lifespan of the motor?
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