Seeking Advice: Limited Slip Differential replacement/rebuild for 2001 BMW E46

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    Paul Oeschger

    (Sorry if this is the wrong place to post for a “repair advice” inquiry. I don’t see any other opening Forum topics on the site)

    The Limited Slip Differential in my 2001 BMW E46 M3 is failing, and I’m looking for advice on what to do about it. In particular, I would like to find out if anyone has experience with a full replacement LSD made by Wavetrac.

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    I’ve noticed a grinding sound and shaking in the back wheels when making slow, tight turns, like U Turns, and it has progressively worsened over the last two months. Upon having a mechanic examine the LSD, (Steve Casaletto of Track Star Racing) he found excessive play in the right side connector from the LSD to the right axel. This is likely due to the impact in an accident over a year ago in which the right real control arm and axel were bent and had to be replaced. The LSD seemed fine at the time, but I suspect it sustained some undetected damage and has slowly been going bad. Steve ran the car on a lift said “the diff bearings are REALLY noisy and I suspect there is damage/failure in the internal ‘differential carrier’ and/or the output flange.”

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    A) BUY A BRAND NEW WAVETRAC DIFF — A new Diff designed and manufactured by Wavetrac is sold by ECS, and the cost for a brand new unit with lifetime warranty is $1568, delivered. This is pretty attractive in concept, except I don’t know anything about Wavetrack and their Diff design, and whether it will perform well on my M3, change the feel of how the car drives, or confuse the car’s traction and stability control system. Is anyone familiar with the Wavetrac Differential? Info about the Wavetrac Diff is at these links:
    —— Wavetrac Web site: Product summary: . There’s a sub-menu of links at the top of this page, and the “How It’s Different” link provides details about their design (which are beyond my mechanical understanding). Unfortunately there is no unique URL for that page that I can paste into this message. You can only see the details by clicking on the “How It’s Different” link.
    —— ECS Web site: Product description page:

    B) USED LSD — A used BMW parts supplier, M Parts Worldwide, who sells parts from parted-out cars, has an LSD from an E46 M3 that has 70k miles, and he claims the LSD was functioning well in test drives before he disassembled the car. Total delivered price is $700. It includes a guaranty that if I find any problems – strange sounds, driving and handling problems, etc – at time of installation, they will send another LSD until I’m satisfied. However, there is no warranty after installation, so there’s always the risk it could fail at any point after I start driving with it. M Parts Worldwide doesn’t have it’s own Web site, but has a Facebook page at and also posts many of its parts on Instagram at

    C) REMANUFACTURED — I’ve found remanufactured LSD options at Turner and ECS, but they’re expensive, at $2000-3000 delivered, and with “core charges” that apparently could increase my cost if they find there aren’t enough salvageable parts in my current diff when I send it in after taking delivery of the remanufactured LSD.

    D) REBUILD MY DIFF — I’m ruling out rebuilding my diff because I suspect there could be some serious damage and more failing parts to deal with than is worthwhiel.

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    3) ADVICE
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    I welcome any advice from those of you experienced in LSD options, particularly if anyone is familiar wit the Wavetrac Diff. (I’m confused by all these options and the many pros and cons in each!)

    Thank you for your help!


    Markus Lewtschuk

    I installed a Wavetrac in my 335i, and think it’s perfect. You can’t even tell it’s there, but when you go to lay the power down, it’s all in. I would recommend it to anyone. If I put and LSD in my 650i, it will be Wavetrac.

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