You're right, that not only is vehicle damage severely restricted by licensing (making sure they're not destroyed and misfigured beyond recognition, or that there isn't much broken glass or parts having flown or broken off from the car itself), it will also take modeling work too, to render believable-looking damage, or at least some form of it, so as not to bastardize the manufacturers' cars.
No wonder why in many other recent games, they're restricted to making their damage models look like, how do I say this... you take a piece of paper, crumple it, then try to unfold it. This is how I see it in GT Sport, plus with minor details such as cracks on the car's lighting systems, and scratches all over the paint (GT5's damage modeling is like almost melting the car itself).
You can't have body panels such as hoods, trunks, doors, bumpers, side skirts and mirrors damaged anymore, and they're becoming an endangered species in many racing games with licensed cars. It's just not going to be that possible anymore, even when games like the original Grid and older Codemasters racing games executed their damage models beautifully.
As for mechanical damage, I personally hope it's a mix between Forza and Project CARS, but with the possibility of elimination from the race, where if you blow your engine or lose an entire wheel, you could get eliminated (also if you turn on "simulation damage", flipping a car will nearly make it almost impossible to flip back on its wheels). It's unlikely, but it will spice things up a bit.