BMW 1 Series Reference Manual page 22

The advantages of the new DSC program function over a mechanical limited
slip differential are:
• It is cost effective.
• It does not add to the vehicle weight.
• Improved fuel economy.
• It activates only when required and if the DSC/DTC is switched off.
• Does not affect handling stability in DSC or DTC mode.
• Avoids the familiar understeer tendency often found with mechanical
limited slip differential.
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E82 Complete Vehicle