I don't want to sound rude, so I will keep it short and only talk about the thing that feels wrong to me. And not how to improve it.

- The car is very unresponsive at steering, even after adjusting steering settings,

- The gear system should not be turned on with assistive steering, it completely ruins it. And nothing happens the way I want it to. And for manually shifting gear, there is no gear diagram, or even simple instructions. Is the reverse first gear? Or last? Also ruined by assisted gear change.

- And finally, the drifting is completely unnatural, if it even has any. The car does not drift at all unless, it's some common scenario, like turning a steep turn.

Car does not drift, in reverse, any sudden braking and steering at high speeds.

- Also not a problem, but the car showed fire and smoke damage when I was changing gears myself. But that does not happen in real life at all. The engine should shut down in some situations, but that doesn't happen either.

Well regardless, steering and shift assistance will be improved in the near future. Thank you for your feedback.

In my advice, you may want to try lowering "Steer Amount Decay" a bit, so you can turn a little sharper at higher speeds, but you'd need a balance to combat against understeer. You can use mouse steering to steer precisely. Though, some cars that typically has only a spoiler won't oversteer at high speeds due to their stronger rear downforce, and I may have over-exaggerated that concept. However they don't have precise aerodynamic algorithms as presented in flight simulators just yet, so I may add it next time. It's also the case that a more front-biased weight distribution is likely to cause more understeer despite having more traction at the front, also for rear-wheel drive cars with open differentials. There is no "fall" in friction yet but I'll add it. Drifting might seem off for now, but if you have the project file, you can lock the differentials on each RWD car to budge sideways better.

Shifting to reverse with max Shift Assist Level might have taken too long, so I'll improve it as said. I don't see a relation between that and steering assistance let alone spinning out and getting the same response. There isn't any sort of damage system to the cars. The closest thing to that is stalling, and that's pretty much it. The fire only emits from the exhaust and nowhere else. Backfiring occurs more on the 2 turbocharged cars considering that apparently rally cars and drift missiles have an anti-lag system.

You may try GDSim. It's another car simulator on Godot, but not made by me. It potentially has more perfected algorithms compared to VitaVehicle at this time. It's not open-source, but the developer has a course of calculating car physics somewhere else on the internet. It should be possible to find.