Quote: Well, I was just trying the updated car demo from download page, and for my surprise, the car now gets deformed when hits something. I like that!
On friction events I check for the point of impact as well as speed and then move the vertex a little closer to the car origin. If you kept banging into things eventually the whole car would get folded into a point. The downside is that recalculating normals for proper lighting takes a while. I have also reenabled the "broken axle" code which breaks the car if you run straight into things at full speed.