2004 BMW 325i automatic - 127,000 well maintained miles - never abused - at 35-40 mph in high gear the rpms will periodically drop 200 and there is a noise like driving over small rumble strips after which the rpms instantly return - the speed does not vary. the dealer installed a warn drive shaft bearing but the problem continues - it is a bit less noticeable in sport mode - what can it be? computer - transmission - ???
The intention is to keep it for many years so if it is a transmission problem would rebuilding the current one or putting in a new one ($yikes$) be the more advisable solution?
My best guess is that this is a problem with the torque converter lock-up mechanism.
If I were you, I would start with a trans fluid and filter change, particularly if you have not had the trans fluid and filter changed every 30k miles, as is recommended by trans experts.
Note: BMW does not specify this service every 30k miles, but that is because they don’t want to pay for this type of service under their “Free Maintenance” policy on newer cars. This works to the advantage of BMW’s corporate folks, and to the disadvantage of BMW owners who think that the “Free Maintenance” is all that is really needed. Sadly, that is not true.
If a fluid and filter change does not do the trick, then I suggest a visit to an independent transmission shop, NOT to AAMCO, Lee Myles, Cottman, Mr. Transmission, or any other chain–unless you want to be told that you need a new/overhauled transmission, whether that is really true or not. In most cases, an indy trans shop can diagnose and fix whatever the problem is for less $$ than the Beemer dealer or the chain transmission shop, and with considerably more competence than the guys at the transmission chains.