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Other than flat tires, does car performance degrade at all after repeated crashes? My experience tells me no.

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I'm pretty sure there's either an option for this in the menus you can toggle on/off. If there is no option then no it doesn't. AFAIK the majority of racing games just use damage for aesthetics and not performance without this option. –  Katustrawfic Dec 11 '12 at 18:37
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You're absolutely correct. Car damage, apart from popping your tires, does nothing other then make your ride less easy on the eyes.

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