For over two years, I had been trying to find the cause of erratic behavior in the temperature gauge on my '73 BMW 2002. The needle jumped about randomly and would often get stuck in the red area. This behavior suggested an electrical problem as opposed to a mechanical one. Here is my fix: first, remove instrument cluster from the dash. Second, find the two slotted, round brass nuts which mount the fuel and temperature gauges to the circuit board (on the back of the circuit board in the center). Then connect a wire between these two terminals, making sure the wire touches both of the threaded ends.
Apparently these mounting connections are part of the gauge circuit, and the one for the temperature gauge is not making good contact. When the contact is poor, the needle jumps. When the contact is broken, the needle pegs itself in the red area. By connecting a wire between these two terminals, the temperature gauge uses the good fuel gauge contact. What exactly this part of the circuit is for, I don't know. Perhaps it's some kind of grounding contact.
Author: Louis A. D'Amario
Tech. Ed. Note: Erratic gauges and turn signal indicators which don't indicate might also be caused by the small ground strap to the chassis of the car being broken.