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At one point damage was already cancelled (sometime in last summer) then promised again. Since that Kazunori has always kept it "on the table" but because concrete evidence is still missing, I don't believe it will be included. PD has also said "other games are using 'simplified' damage" and they want to do it perfect. Obviously that can't be done totally perfectly. So he keeps it so simplified that it actually doesn't exist.
Interesting that the good old "car manufacturers don't allow damage" reason (and partly excuse) has been dropped which seemed to be the main reason in GT4...
And about damage in LFS vs. GT - not really something we can brag about. But least when you crash a wall at 300 km/h in LFS the race is done.
Everyone understands this. It's just the skewed marketing which makes people think GT is teh real life, that gives at least for me high blood pressure.
This is probably close what they're trying to do. For example the BMW-Sauber and Formula BMW deals kind of came suddenly to the picture and obviously were too good to pass. Scawen has mentioned few times that he wants to get rid off the current "alpha" tag because it certainly does more bad than good (makes people think the game is unfinished and unpolished, while it's only unfinished). In LFS's development time is the biggest issue.