Switch to reverse and then hold your finger tip on the sensor, you should feel a bit vibration.
Other usual faults: the speaker to beep is defective or the connected wires are corroded.
Here is something on that subject on the German board
http://www.7-forum.com/forum/showthread.html?t=64230&highlight=PDC

shogun >>E32 750iL<< 11/88
7 series Tech tips
http://tinyurl.com/3486c

• How does one remove the rear bumper? - davidc 2007-01-14 23:50:09 (362 views)
  • Final recap: A pictorial guide to removing your rear bumper and chrome trim. (pic) (url) - davidc 2007-01-16 00:29:32 (3843 views)
  • dave,there are 2 clips on the blk top cover .They pop off - JoeC 90 750il 89 735il 98 740il 2007-01-15 22:29:05 (211 views)
  • Bentley 510-7 (although I think it is harder than they make out) (nt) - Nick (Australia) 2007-01-14 23:55:06 (212 views)
    • Can't find my Bently manual tonight. Been missing since we moved. (nt) - davidc 2007-01-14 23:56:23 (184 views)
      • easy (rear bumper removal) - shogun 2007-01-15 00:03:58 (351 views)
        • OK, I've removed the chrome trim, but the bumper won't budge. (pic) - davidc 2007-01-15 19:23:16 (336 views)
          • you must pull strongly and evenly - shogun 2007-01-15 19:45:30 (211 views)
            • Got it. Had to put some serious force into it, but it's off. (pic) - davidc 2007-01-15 20:44:14 (288 views)
              • Pull straight back - Shayne 2007-01-15 21:12:44 (193 views)
                • Thanks. That did the trick. Here are some photos. (pic) - davidc 2007-01-15 22:14:14 (335 views)
                • This is turning into a very detailed thread. Good for the archives! (nt) - davidc 2007-01-15 21:29:01 (198 views)
              • never removed the chrome trim on side - shogun 2007-01-15 21:06:15 (185 views)
        • not always easy (rear bumper removal) - steinway 2007-01-15 06:07:39 (235 views)
          • here a pick inside bumper (url) - shogun 2007-01-15 07:17:09 (302 views)
            • Shogun - Johan750 2007-01-15 12:37:09 (192 views)
              • that was on a no-oil contact day, easy stuff (nt) - shogun 2007-01-15 21:11:01 (144 views)
        • BTW, does anyone have photos of the factory PDC setup in the rear bumper? - davidc 2007-01-15 00:11:05 (228 views)
          • Yes I have PDC, AND IT DOESN'T WORK!!!! (pic) - Nick (Australia) 2007-01-15 00:15:32 (376 views)
            • you can check the sensors with your finger (url) - shogun 2007-01-15 00:39:46 (250 views)
              • My main problem is the starting fault tone - Nick (Australia) 2007-01-15 01:22:16 (248 views)
                • Did I read correctly on this german link? - Nick (Australia) 2007-01-15 08:36:57 (199 views)
                  • yes, he said so - shogun 2007-01-15 18:04:12 (187 views)
                    • Re: yes, he said so - Johan750 2007-01-16 14:02:20 (236 views)
        • Thanks. I'll take some pics as I work on it. (nt) - davidc 2007-01-15 00:09:57 (211 views)