I've been meaning to ask about this, but it always slips my mind. Put simply, how are we going to render damage? AFAIK there are four ways to do it, and almost all renditions I know of include parts hinging off or coming partially or fully undone:
1. Have multiple prerendered models or textures for different sections of the car. More refined versions include multiple renders of the same type of damage, so a small bump will not completely flatten a section of the car. GTA games often had a chassis part that would not change along with body panels, bumpers, and glass stuck on; each non-chassis part would have exactly one "damaged" model and one "undamaged" model, so smashing into a wall face-first would damage the front bumper and possibly shatter the windshield. Poorer implementations of this include most GTA games in the GTA3 era, whereas Mafia II, Driver: San Francisco (all versions), and Vin Diesel: Wheelman pull it off nicely. Decals are only available in nicer implementations, however.
2. The Saint's Row 2 method, i.e. "wrinkly cars". When a car model comes into contact with an object at moderate or high speed, the chassis is not deformed but the body panels become dented. Model deformation is proportional to the speed of the collision and the exact physics of the collision (so crashing into a car will do less damage than crashing into a wall). Similar to the first method, but damage is not pre-rendered. Decals can usually be applied to the car's model(s).
3. The GTA4 method, i.e. "ridiculously deformable cars". When a car model comes into contact with an object at any speed above walking speed, the chassis and body panels are deformed as if the car was made entirely of steel. Model deformation is dependent on the vehicle in question (it can be coded differently for different vehicles) and is proportional to the speed of the collision and the exact physics of the collision (so crashing into a car will do less damage than crashing into a wall). Damage to headlights is almost always pre-rendered, but everything else can be deformed to your heart's content if the car's statistical health can be kept above zero (in GTA4, you can do this with trainers). Decals can be applied to almost any part of the car.
4. The Rigs of Rods method, i.e. pure softbody physics. When a car model comes into contact with an object at any speed, deformation will occur, but the quality of the damage modelling is dependent on the quality of the original vehicle model. In Rigs of Rods, many of the vehicles that come with the simulator will deform dramatically if provoked, whereas nicer vehicle addons will feature semi-realistic vehicle damage and predictable deformation. Vehicles with more extreme flaws or faced with more extreme situations may spread themselves across large areas like a paste or jelly.
Additionally, Bugbear's Next Car Game features some...interesting...non-prerendered vehicle damage modelling.