I have a rear wheel drive lowered car (BMW 325 E36). A few months ago, the driver side rear tyre burst (I hadn't noticed the wear on the inside). Now I can see the inner of the rear tyres is definitely wearing more quickly than the outer.
I assume there is a negative camber on the rear tyres. Given that the car is lowered, is it still possible to fix this?
Yep, put it back to standard height ;)
IIRC E36s are twin-wishbone IRS at the back, unless you've got a compact which runs E30 rear suspension. I can't remember if the wishbones themselves are adjustable, I have a feeling that the standard ones aren't and you'd have to get aftermarket ones instead*. Depending how it is mounted, you may well find that you can shim out the top wishbone slightly, thus pushing out the top of the wheel.
Find a good local tyre place with a proper 4-wheel laser alignment rig, they should be able to tell you how far out it is, and may well be able to adjust it for you there and then.
Whatever you do, don't drive it more than you absolutely have to (and preferably not at all) until you've got it fixed - the current set-up is positively dangerous (after all, you've blown a tyre already!), and not only are you risking lives, but the authorities look very badly on people driving cars that are known to be unroadworthy...
*Which I wouldn't recommend unless you're going to splash out on proper Koni or Gaz stuff. BMW know a lot more about suspension design than most aftermarket suppliers...
As Nick C said, you can restore it to proper height. Or, if you really must have it lowered, you can upgrade it with camber plates to give it the ability to have the camber adjusted by an alignment shop.
