n late 1986 BMW introduced a new 7 series model that where equipped with a new third-generation Digital Motor Electronics (DME III). This new DME III become standard in the 1987 635 CSi model.
For 635 CSi the new DME III meant not just improved fuel economy, but also more power and torque. New power output for the 3430cc engine was 220 bhp at 5700 rpm and the torque was now 232 ft.lb at 4000 rpm.
The new DME III made big improvement for the catalyst engine too, new ratings where 211 bhp at 5700 rpm with a torque 225 lb.ft at 4000 rpm. This engine was also used in the European model of 735 i. Countries, like Sweden, who had been using the non-catalyst 204 bhp engine from 735 i for some years, now had the new 211 bhp catalyst engine in the 635 CSi.
Note that some contries, like USA, never got the new DME III (in a 6 series car).
A catalyst version of M635 CSi was available from december 1986 (1987 model). It produced 256 bhp at 6500 rpm with a torque of 242 lb.ft at 4500 rpm.
BMW managed to federate this engine and the first M635 CSi showed up in the US in July 1987.
In June 1987 the 6 series got new ellipsoid headlamps that provided more light without dazzling of the driver and oncoming traffic. The front foglamps also had this ellipsoid technology.
At the same time (06/87) there was a change in the front and rear of the car. A new bumper system with integrated impact absorbers where introduced. This new bumper system minimized body damage in case of a low-speed collision, upto 4 Km/h. It also had better parking protection through larger wrap around bumper and rubber strips.