An E36 thermostat can fail two ways, and the temperature gauge tells me which:
- Stuck open — coolant flows to the radiator constantly, so the engine takes forever to warm up, the gauge never reaches the middle (especially on the motorway in cold weather), the heater is weak, and on OBD-II cars you get a P0128. This is the common E36 failure — it hurts economy and wear more than it strands you Common Codes.
- Stuck closed — coolant can't reach the radiator, so the gauge climbs toward hot and the engine overheats. More dangerous — I replace it urgently.
A gauge that spikes and drops erratically is usually a different problem — trapped air after a coolant change Cooling Bleed, a failing water pump (eroded plastic impeller), or a low level — not the thermostat itself.
The thermostat lives in its housing on the engine and comes with a new gasket/O-ring; I fit it with the correct opening temperature and the bleed/jiggle valve at the top, then bleed the system. Since the housing is plastic and cracks with age, I inspect it while I'm there and replace it if it's weeping Cooling Refresh.
For this you'll want the correct-temperature thermostat with its gasket, and the plastic housing if it's weeping — I've put them below.