The two cars I've used the most so far are the Stratos and the Impreza. The Stratos has absurd handling so you can keep full speed through the majority of turns, but the acceleration is very poor. The Impreza has solid acceleration but the handling isn't nearly as good as the Stratos, so you have to slow down more often. I've only dabbled with a few of the other cars so far, but I believe they all have the same top speed.

Here's my best run in Time Attack on Desert from last night, with the Impreza:

I could only manage a 47'93" with the Stratos. While it can maintain 232 KPH in the final turn in Desert, it loses too much to the Impreza's acceleration at the very beginning to keep up. Still, more testing with the other cars is needed.

Manual transmission gives you a max top speed of 232 KPH instead of 229, so is generally preferable.

Unlike the other Sega Rally games, there doesn't really seem to be any kind of drifting or power-sliding in this game. Your car just goes straight ahead at all times. I use first-person mode because it makes it easier to see the track and removes the misleading car model. The car model will show you drifting all over the place, but the tilt of the sprite doesn't actually affect handling at all. Should be preference, though - I haven't seen any concrete advantages for first-person beyond visibility.

I haven't messed around with the car settings enough to say much more than this, but the Steering option is huge. You can gain a lot of turning power by switching this setting to "Quick". It does make the car more sensitive (especially with the already-responsive Stratos), but since this game's physics don't penalize your speed when turning, it's a straight upgrade if you can handle the twitchiness.

On the 46"46 I got on Desert, I used the following settings:

Lancia Delta 4WD MT Gear Ratio: High Suspension: Normal Steering: Quick Brake: Quick Tire Type: Gravel