Rendering is, for the most part, simply ray tracing. This means that in a rendering program, you can set up light sources, and the renderer will track each ray of light to it's end position, taking into account objects in the way, refractive and reflective surfaces, etc.
A rendered image of your car can be useful for a picture or a preview, but there isn't any way for a rendered image to be placed in-game (unless, if course, you rendered it from side and top views and then converted it to be your skin... but that's really quite pointless).
As far as LFS goes, the engine (like all game engines) effectively do their own rendering 'on-the-fly' and whilst this won't be as high quality as rendering a scene in rendering software, it is real-time
So, basically... you don't need to render your skin unless you're trying to show it off, as the skin itself is rendered in LFS.