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Actually the Smoke Generation seems real to me! go find a D1 video and even check the rules, the more smoke the better is the thought. Ive been to many D1 events and In fact they have tires that give off red smoke so I think you may be mistaken.
I don't think so.
Powerful drift cars make a lot of smoke (although even then it's not always as thick or heavy as you would see in GT5) but it takes real intent to do so. In GT5 you can get a cloud of such thick smoke by doing the faintest power-slide out of corner in anything, even a Cappucino! A slide which is nowhere near as long or side-ways as the M5's drift at the end of that video will leave a thick white cloud behind.
If you look at my earlier posts here, you'll see that smoke volume is not the issue, in fact the only time it looks realistic is when you're drifting a high-power car aggressively (although the smoke from the front tyres whilst countersteering those drifts shows up how messed up it is too and ruins the effect). I don't want them to reduce the maximum, or how long it can stay in the air.
I just want the way it is made to be more realistic, which happens to be a reduction of smoke for 95% of the time.