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I found the basic difference is the starting capabilities of each car. Acceleration, top speed, handling and braking. Also the chassis of the car, hatch, coupe or saloon. Going from memory.
xWD I cant recall if it is. I dont think so. But you should keep an eye on the handling if its going to make any difference, it will be there but I dont think so. Again going from memory.
Upgrade progression basically gives you points to allocate as upgrades.
https://steamcommunity.com/sharedfiles/filedetails/?id=2800958303
In this screen you can see I have 24 upgrade points allocated to the four stats. So theyve gone from red, to yellow and one item is rated green. Im not certain but the points may come from finishing races. The more you complete the more points you get.
Also works on the same principle with unlocking cars:
https://steamcommunity.com/sharedfiles/filedetails/?id=2800953801
This one has one more mile of driving, but you still have to complete a race to get the mile to register.
I cant remember much about MP. Sorry. Hope the abv at least helps.
If you see the screenshot above, first one, it should how many points you can allocate to a particular facet of the car. Each one combines to upgrading the four main stats. So engine and chassis = acceleration/speed, Tyres and suspension = handling etc.
Once you put points in a component it will show what the difference is, so its up to you to experience.
Just bear in mind that each car has 4 classes A - D which inrease the racing band of the car, the more points are allocated.