The AH in Forza came back because people who played the 360 games wanted the feature to come back.
Back in the day, the AH was used to auction exclusive creations (paints/tunes), not cars. The car only had value with a unique paint. You could buy a car from the Autoshop, but not "that" car.
In FH3, it was not implemented differently from older games, but the way people used it was much different. The AH, to this day, lets you set higher buyout prizes if you're a content creator, but most people who auction cars gamed their way to Legend and use it just as a way to flip exclusive cars and farm money. This is because, starting with FH3, Playground implemented Forzathon and other mechanics to drastically increase the number of unicorns ("Exclusive" and "Hard to Find"). So what gains value in the AH are very rare cars and, most importantly, cars in popular demand.
The AH in Forza has tons of issues related to legacy features as well as the cross-platform play which greatly favors PC players using macros to speed up the searching process. I'm pretty sure the market was also flooded with hacked PO cars, forcing Playground to ban their auctions.
It's the kind of feature that could be really great, but was very badly implemented as you said. Forza doesn't care, because one of the biggest sources of player engagement is the AH and the flaws actually help the engagement metrics.
I do remember the AH being somewhat interesting when it was
the way to "sell" designs. It was a lot more special back then...almost like NFTs in that the author of a particular design could precisely control how many examples of a particular design were distributed. My designs have never been particularly hot sellers online, but I do remember shifting a few back in FM2 (I think it was FM2) and I sequentially numbered each one of them. Designs as of FH4 are just a miserable experience to shift through as the game encourages everyone to upload anything,
everything, even if it was just selecting a different OEM color! It's probably, as you say, a function of engagement metrics - "Look how much time they
waste spend in the auction house / design gallery! They must be having fun, right?"
To circle back: As an experience, finding a rare color combination of a car in the GT UCD is a more special and more immersive experience than simply selecting that combination in the F series even if it could be said its gratuitous and somewhat arbitrary. It more closely reflects buying a used car in real life, you kind of have to search and wait for the right one to pop up - you don't get to select it from a configurator!
Again, it's a game...but for me a game has to have immersion for me to stay interested/engaged. I want to feel enveloped in the experience, not merely watch it pass by on the screen. GT has always,
since day 1, excelled at the former. It's like curling up in an old leather arm chair with a glass of bourbon and listening to jazz. That's the GT magic for me.
@snowgt I never played/owned GT Sport so I can't say I share that experience/frustration, but I get it. For me the most fun part in GT games (at least as related to collecting cars) was winning cars via Championships...not just amassing enough cash to purchase them. I hope/expect this mechanic to play a big part of GT7.