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There are a lot of people who will sell you an extended warranty for less money than the dealer. Warrantydirect.com is one option. Carchex.com is another.

The reason they are so excited about the opportunity to sell you a warranty is because they make a huge profit on it, even though they sell it for less than BMW (which makes an even bigger profit on it). You never "really need" a warranty... most people will spend less money on repairs than they'd spend on the warranty, and that's why they make so much money. With the warranty, you're paying a premium for peace of mind.

You may have heard that you "really need a warranty with a BMW" because BMW has a reputation for having expensive parts. However, this is no longer true... I think they've made an effort to combat that reputation by making their parts cheaper. If you look online, you'll find that replacement parts for BMW cost about the same or less than similar replacement parts from, say, Ford. That's not true for everything - you can't compare your 135i brakes to Ford brakes because the 135i has much better brakes, so you'd expect them to cost more. But if you compare a body panel, for instance, you'll find that the prices are about the same.

As far as reliability, BMWs are generally pretty good.