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The short answer is YES. It is important that you ensure the business CD model you buy will support the aux input cable by direct connection if you want to avoid using devices like a DICE. If you do a search for Business CD models, you can find a post that lists all of the serial numbers/models that were installed in E46s.

One hint - the software number on the radio has to be 43 or higher to support a direct plug and play iPhone connection.
 

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Vandy boy. What would you suggest to be the easiest method? I don't have steering wheel controls so I don't need to control it from there. Don't even mind letting my playlist just play with no control to the tracks. Just gutted I can't play my music collection. Thanks in advance
The easiest way is to find the right stock radio that will support iPod or iPhone with an auxilliary connector that can be purchased from the BMW dealer for $39.95US. You literally plug in the connector to the back of the radio. BMW recommends mounting the female connector inside the glovebox. I simply ran it behind the HVAC controls to the "sunglass compartment" above the ashtray. I drilled a hole in the compartment (it is removable) and attached the mounting plate and the input. Then you run a double male connector from your iPhone to the input. Very tidy system that you can put away when not in use.

The Business CD must have a MODE button, not a CD button. Be aware that all radios with a MODE button will not support the auxillary connector. Most for sale on ebay will show the label with the specs, software number, etc. Be sure whichever radio you buy is software 43 or above. Try a look at the UK and US ebay sites to familiarize yourself with the labels, etc. You can always luck up and find one from a car being parted out.

All you have to do to remove the radio is carefully pop off the trim above the glove box. The trim piece above the radio comes off easily, and then pop off the trim attached to the radio trim. Remove the screws and the radio slides right out.

Good luck!
 
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