Although in the right direction the blue/red setting seems to be confusing some here. The purpose of this setting is to allow varying temperatures from top to bottom eg cooler air to your face and warmer air to your feet.

The blue/red setting does not actually have any control over the heater or the compressor. What it actually does is to mix the air coming out through the vents in varying amounts depending on where the "dial" is set to. So if it is on blue fully then the air coming out of the vents is from what has been cooled by the air conditioner. If it is on red then another circuit opens up to mix this air with external air.

In effect it is smilar to say having your hot water tank set to 50 deg celcius. You may want the full 50 to do the dishes so cold water tap is closed, whereas in the bathroom you may want to open up the cold water tap to bring the temps down to wash your face.

So all it does really is to open up a vent to varying amounts to mix air with an external circuit.

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2009 135i M Sport Convertible
2008 X5 3.0si
2003 E46 318Ti M Sport Compact - donated to parents
2003 116i Hatchback - donated to brother
2002 316Ti - Sold
2000 318ci M Sport - Sold
1998 318i Sedan - Sold