Two quick and fairly easy things cause oil leaks on these cars -- bad oil filler cap and bad valve cover gasket.

The filler cap is plastic, and they crack. Causes about a quart in 800 miles or so oil use if you do any highway driving, and doesn't always show oil drips because it only leaks on the highway. Clue is that the depression around the cap will always have oil in it even if you remove the cap and wipe it up. Oil runs down the front of the engine, looks exactly like a top chain cover leak except there is more on the left side (where you cannot see it easily).

New filler cap is a couple bucks, less than a quart of semi-synthetic oil.

The other leak is the valve cover gasket -- they get rock hard and crack through the seal surface after about 30,000 miles or so, and dribble oil everywhere, but mostly out the exhaust side. It burns off the manifold when they really get bad, so if you smell burning oil after a highway run once in a while, replace the gasket. Instructions have been posted, but you MUST get the valve cover and head completely clean and dry before installation and must not use ANY sealant on the valve cover gasket, else they always leak! I always wipe the head down with solvent where the gasket seats, never had a leak with a new gasket.

Older M103s would be needing valve guides by now (the TE got a valve job at 160,000 miles), but an 89 should have the harder guides. You'd see serious oil ash deposits on the plugs if this were the case, though!

Peter

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1972 220D ?? miles
1988 300E 200,012
1987 300D Turbo killed 9/25/07, 275,000 miles
1985 Volvo 740 GLE Turobodiesel 218,000
1972 280 SE 4.5 165, 000 - It runs!