It may be counter intuitive but with a correct physics model, following actual car and parts specs / dimensions makes life easier since you don’t have to tweak everything by yourself to get a good result.
For arcade games, you may have the same physics as a base and then tweaks on top of it to make it more entertaining.
Cars are the easy part though.
Tires are where the fun begins, along with different road types and weather.
Now for the original question, it’s up to the devs and for games that are level locked you will have arbitrary limitations or boost ups for different levels. (Especially pay to win games)
Lastly you also have IAs and usually in arcade games they are not following the same limitations and can defy the physics (need for speed, gran turismo etc…).
I have just started learning game dev. I do not know what the AAA Devs actually do. They can just do some research. But if it was upto me, I would identify several factors like acceleration, top speed, breaking, how well it turns.
Then I would give an importance level to these, like acceleration is 5, breaking is 2, top speed is 6.
Then I would add them up in a formula like
Weightage*stat = final rating.
Eg. The Ferrari has 90/100 acceleration, 75/100 breaking
Then the final rating would be 0.9×5 + .85×2 = 5.2
If you want to know how they would get the number 90/100 for acceleration, that is research.
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