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Whilst Milestone remained a fairly small studio up until WRC 4 I thought they at least tried to improve the vehicle modelling along with physics (WRC 3 was great, so was 4.)
Here are some pics I took back then from 2, 3 and 4. Improvements I agree were more noticeable in lighting and particle physics but modelling was definitely improved.
3 and 4 were definite improvements over 1 and 2. They just didn't quite reach the level of polish I expected from an official WRC game. I am from the time Evolution Studios used to handle that function. Those games were amazing.
The modelling depends. Some cars are ok and others are just wrong, the proportions on the Fiesta WRC (the one you show) were wrong, from the first game it showed up on to the very last one. The most egregious modelling error for that car was the wing, whose tips didn't even touch the car. It was like it was suspended in mid-air. Despite that obvious flaw (much more so than other parts of the car), they never fixed it.
While Codies would give a WRC title the right polish, I don't rate the physics, FFB and overall handing as anything like as good as SLRE or PC2's.
I find the cars in SLRE to be sluggish and unresponsive. PCARS 2, I like on a similar level to Codemasters' physics, but could SMS make a game in time for a release this year, on October/November at the latest? Genuine question: how many people do they have right now, to see if they could form a team for a World Rally game?
There's a video from Daniel Elena (Loeb's co-driver) during service on Rally Mexico, this year. At around 3:10 he mentions, in French, he's going to take pictures for the WRC game. So, I guess new game is in development?
About Kylotton and their work on V-Rally, I also heard that part of the deal with having the WRC license, is that you cannot develop any other rally title. If this is true, then it's definite that they don't have the license anymore. I hope they still get a good car selection for V-Rally 4.