You can modify brakes, get racing slick tires or offroad tires, buy suspension mods to lower the ride height & shock performance, some of the cars have racing mod body kits after you've purchased weight reductions, you CAN choose different rims for your cars, you can modify the HP by purchasing different turbo systems, intercoolers, exhaust systems, engine balancing, etc. You can also buy upgraded gearing systems--the Racing Transmission allowing 100% modification of gear ratios--and clutches & differentials.
You CAN'T unfortunately choose custom paint colors on your race modified car. Can't change lights or choose to put a wing on or tint the windows, etc.
Still, in all there's an impressive amount of tinkering you can do with your cars in the game!
Hope this helps you out some!