Well, it is hard to measure engine damage in terms of a two dimensional bar - because there are many thousands of components causing different amounts of performance improvements and reductions depending on damage.
Also, it being a bar would give the impression that your engine has a set amount of damage before it dies, which is unrealistic.
Some games have diagrams that show where the engine damage actually is, but this is impossible to know while you're driving in real life and would thus be a very "arcade" style feature for the game.
Before anymore people flame S14 DRIFT! for his comment, please note that he has'nt been in the LFS scene for a while, so he has probably missed the news that the FBM got put into the demo.
*I left about 8 months ago, came back about 4 days ago.. so yeah..*
And like, flame me, I couldn't give a crap. I've spent the last 8 months trolling another forum for a different game filled with immature brattish 12 year olds so you lot are nothing to be worried about.