Dashboard views are used to make the player feel as if he's in the middle of the action. It's usually presented as an option and never forced upon the player. These views have suddenly popped up on next generation consoles because of the the graphical power of the hardware that allows for a detailled, immersive view.
Dashboard views do have inconveniences though. They tend to obscure your view (especially on smaller monitors) and make handling the car more difficult.
Dashboard views are more commonly known as the cockpit view. In some games, the right stick lets you see out of the right or left windows and some games (
such as Need for Speed: Shift) go as far as bluring momentarly the action when you crash to add to the realism.
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