I've seen this statement before and with zero evidence to back it up at all. The fluid degrades due to shear and changes color due to wear particles, exactly the same as the PS fluid because....it's the same fluid as the PS. PS fluid doesn't boil, it has it's own cooler. No data anywhere that the SMG fluid temps ever get over 130F, just assumptions. I'm not going to say the insulation won't help anything, but the notion that the fluid degradation is due to heat has no merit at all IMO and no evidence to back the claim. Further, degradation of the fluid, even if a fact, would have little effect on the mechanical components in the SMG hydraulic system with the exception of a loss of viscosity causing inceased leak-by on the .0001" spool-to-cartridge clearance as well as past the cartridge sealing o-rings that due to age, exposure, and material choice, have taken a "compression set" (see the
Parker O-ring handbook for reference.) If insulation on anything would help, it would be the wiring harnesses, especially at the top of the SMG on the shift position sensor which uses significantly under-spec insulation.
Having rebuilt about 30 of these hydro units now from the ground up, the most common failures:
- The pump motor is the most common. This is a function of service life and MTBF of a sealed, brushed DC motor where the carbon dust is held inside and specific manufacturing peculiarity which prevents the brush springs from maintaining appropriate contact pressure against the commutator. Lower spring pressure results in increased armature path resistance therefore lower current flow to the armature, therefore less magnetic field strength, and lower armature torque as a result. These have become silly expensive from BMW and we have now started to refurbish these units in-house. The goal is to offer a refurb motor for less than half what BMW does while matching their warranty (2 years) and providing a more complete set of parts than the OEM does (critical o-rings not provided for the swap).
- Shift position sensor strips: The wiring insulation on these units is very poor. BMW is certainly capable of spec'ing the appropriate insulation since we don't see O2 sensors (literally inches from the header). These units sit on top of the SMG and could easily have been made to last longer. This was really more of a failing on Getrag's part as the transmission designer and FTE's fault (manufactures the sensor) for choosing low grade wiring. When we refurbish these, we use Tefzel MILSPEC wiring which is rated well above the temps seen there.
- O-rings: Most degradation in the operation of the units is due to the aging of the o-rings. These should be very malleable and form fit there environment. O-rings actually need to be soft enough to be pushed out of their position and forced into a gap to seal it. That's how they are designed. When an o-ring takes a "compression set" it actually hardens due to loss of porosity. When you take the o-rings off of an old VANOS solenoid or SMG solenoid, you often notice they break before they stretch much. Flouroelastomers (Viton) hold up better than Buna-N, but
Buna-N has always been the default choice in the automotive world due to "cost".
- Very occasionally, we see an actual pump inside the hydraulic block that is bad. Most often this not from a naturally occurring failure, but a lack of following BMW's procedure for replacing the motor and the wrong two bolts were loosened. When this happens, the dry seal established at initial assembly is broken and often overtorqued to compensate for the leakage afterwards. This results in crushing the gear rotors between the drive bushing plates followed by metal on metal wear due to insufficient oil clearance (sound familiar?).
Sorry, this wasn't intended as a rant on your post, but there's a lot of misinformation out there on why these fail and how to prevent it. A lot of claims are made without data to back it up and at some point that leads to a false sense of security and potentially very poor financial decisions.
Do I think it's beneficial to change out the hydraulic fluid? Absolutely. Do I think heat insulation will help anything? Yes, if applied in the correct place, and the reservoir and block aren't going to change anything.