They axed it one week before it was to be shown at the 1989 Geneva auto show. There was concern that there would be too much demand for non-M cabrios. If built they’d potentially kill sales of the cash cow top trim 3-series convertibles.
The sole prototype was fully functional, and BMW had even decided on an msrp. The design was all but frozen for production. It was squirrelled away in a secret garage afterward and was only shown to the world upon the 25th anniversary of the M5.