Hi, just a couple of general points from a lawyer with a problem free E89 (they do exist!), especially as it seems that a number of people might have considered rejecting their cars at one point or another. (In typical lawyer fashion I'm going to disclaim all liability for what I say below, and that you shouldn't rely on it as being legal advice.)
If you do end up taking things further and the car was purchased through finance, the relevant legislation is the Supply of Goods (Implied Terms) Act 1973 (particularly section 10(2)), and not the Sale of Goods Act 1979, which would only be applicable if you purchased the car outright. Depending on the terms of the agreement, you would also probably need to pursue the finance company, rather than the dealer, as in a strict contractual sense they purchased the car from the dealer and then hired it to you.
In JDM's case, I think that he probably does have fairly good grounds at least to try and reject the car. A few cases that might help to argue the point (and are relevant for others too) are as follows:
(1) Rogers v. Parish (Scarborough) Ltd
(2) Bernstein v. Pamson Motors (Golders Green) Ltd
(3) B.S. Brown & Son Ltd v. Craiks Ltd
I won't bore everyone with their exact content, but a few useful elements of them are:
From (1), directly related to a car purchase, the appearance of the car matters as much as mechanical elements, and the supposed quality of the Z4 and BMW should be taken into account: "...one would include in respect of any passenger vehicle not merely the buyer's purpose in driving the car from one place to another but of doing so with the appropriate degree of comfort, ease of handling and reliability and, one might add, of pride in the vehicle's outward and interior appearance. What is the appropriate degree and what relative weight is to be attached to one characteristic of the car rather than another will depend on the market at which the car is aimed..."
From (2), also directly related to a car purchase (although second-hand in this case), when deciding whether it is reasonable to reject the car it is necessary to take into account whether all the defects could be rectified with relative ease and would result in a car that was "as good as new" or whether rejection would be a more appropriate solution.
From (3), relating to the sale of a carpet, but the principle is the same, the price paid for a product does matter and you are entitled to expect better quality from a more expensive product than you would be from a cheaper one.
One point to bear in mind is that if it is decided that you are not entitled to reject the car, you strictly speaking still have a choice between repair and replacement. The dealer would be able to argue that one is cheaper than the other (most likely repair), but it can't hurt to remind them that you would push for replacement if things got serious.
Finally, if you do find that you have problems, then make sure that you take them up with the dealer within the first six months as, during that time, it would be for the dealer to prove that any problems were not sufficient to make the car of unsatisfactory quality. After six months, this burden of proof will reverse, and it will be for you to prove that the problems were sufficient to make the car of unsatisfactory quality.
Sorry that was so boring, but hope it might help someone at some point and given that I've lurked and taken a lot of useful information from this forum, I thought I'd try to give some back! Oh, and I still haven't put up pics of my car...!
Any questions, let me know.