I like it reminds me of the Destruction Derby 2I think it's helpful because you know where your car is damaged. For instance in a derby, You've crashed into several cars with the front of your car. It's now red and red means bad because the next crash you do, could be fatal for you.So you drive backwards in order to get more points and/or survive longer.
They're not talking about the image of the car on the left showing the amount of damage, but the directional on screen indicator when you get hit. Like in shooters if you get hit from behind it has some type of indicator on the edge of the screen or in a circle around the crosshair at the bottom indicating you got hit from behind, along with the darkening of the edges of the screen when you get hit.