I will pay a bit more attention to the damage playing more today. Think I have had it on full already with only ABS on for driving aids.
So far I can't recall apart from very good visual damage in body parts, rolls, smoking engine and complete wreckages. You get the usual slower acceleration, limited top speed etc but again if your looking for realistic damage you wont find it here. Well so far I certainly havnt.
Id say the damage is made in a way to impede each others cars and improve races between fellow players so as a gameplay mechanic it might be okay. I havnt been able to play online to confirm that yet or tired a split screen race.
Seriously though I will say this, if any game is likely to put your wheel under serious pressure it is this one. GYMKHANA is mental. It had my T500RS making a sound I hadnt heard before after about 6 goes.
Bit concerned tbh how hard that is on FFB.